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Saturday, 3 July 2010

Takaful penetration low in Pakistan

KARACHITakaful, an Islamic alternate to conventional insurance, has very little penetration in Pakistan, but like conventional insurance, it has immense potential as it not only shares risk but also offers fair returns, said CEO of Pak-Qatar General Takaful, Rohail Alikhan.
He was talking to the members of the banking and insurance sub-committee of the Karachi Chamber of Commerce and Industry (KCCI) on Tuesday.
There are various examples in Islamic history where it is said that humans should take all possible measures to mitigate life and property risk, he said. Risk mitigation is allowed in Islam and this is what takaful is all about, he added.
CEO, Pak-Qatar Family Takaful, P Ahmed said that takaful is a Halal and ethical alternate to conventional insurance, which is based on the concept of brotherhood and mutual solidarity.
He informed that takaful is a transparent community-pooling system in which participants contribute their savings into the common fund to help those who need it most in times of financial difficulty.
Takaful operator creates the Waqf fund or the “taburru fund” where participants contribute their premiums/contributions on the basis of “taburru” into Waqf fund and claims are paid by the Waqf fund, he explained.
Ahmed said that “there is a desperate need as well as potential for takaful in Pakistan as only about 0.6 per cent of our GDP goes towards insurance whereas in India that figure is more than 3 per cent”.
Pakistan has one of the lowest national saving rates in the world. National savings, as a percent of the GDP, declined from 20.8 per cent in 2003 to 14.3 per cent in 2009.
Ahmed said that following the introduction of takaful rules by the SECP in 2005, five takaful operators have entered the local insurance market: three in general and two on the family side.
He said that risk mitigation and financial protection is something that everybody needs to be concerned about. In order to do this efficiently, a tool that is not only effective in mitigating risks but also competitively priced as well as in compliance with Shariah.
Alikhan said that Takaful companies can invest their premiums in Shariah compliant investment avenues only and all the activities at takaful companies are supervised by an independent Shariah board.
Takaful companies can invest in Shariah compliant government securities, immoveable property, joint stock companies, redeemable capital, mutual funds, musharika certificates, term finance certificates and participation term certificates, he added.
“Sixty per cent of the population of Pakistan is under the age of 25, which means you have a customer potentially for 40 years,” he further added.
Published in The Express Tribune, June 30th, 2010.

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1 comment:

Web Designing Karachi said...

KARACHI: Takaful an Islamic alternate to conventional insurance has very little penetration in Pakistan but like conventional insurance it has immense potential as it not only shares risk but also offers fair returns said CEO of Pak-Qatar General Takaful Rohail Ali khan

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