Takaful update saarc 2014


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This presentaion is giving an update of Takaful business globaly and in Pakistan. I delivered this presentation during 2nd SAARC meet the regulator conference in Karachi

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Takaful update saarc 2014

  1. 1. PERVAIZ AHMED SAARC Conference 16th April, 2014, Karachi T A K A F U L Shari’ahCompliantAlternative to Conventional Insurance
  2. 2. Development of Modern Takaful- Global  19th Century- Western socio-economic, political, and legal orders overshadowed Islamic and traditional local norms  1950- Muslim Revival and Renaissance began around the world on multiple fronts after getting out of colonialism.  1970- development of Islamic Banking framework started  1975- The first commercial Islamic bank, was established in UAE  1979- First Takaful company was established in Sudan as need for a practical risk mitigation mechanism grew with the growth of Islamic banking  1987- Central Bank of Malaysia issued first ever Takaful Rules  1990- Formation of AAOIFI  1990- Rapid development of Islamic Banking all over the world  2000- Many Takaful companies were launched in Malaysia and GCC  2010- Regulator issued Takaful rules in many territories
  3. 3. Development of Modern Takaful-Pakistan  2000- SECP repealed Insurance Act 1938 and issued insurance Ordinance which has the mention of word “Takaful”  2002- SBP issued license to First Commercial Islamic Bank in Pakistan  2003- Ijtimah of scholars in Darul Uloom Karachi to review current Takaful modals all over the word and suggest modal which is suitable for the Pakistan market. Wakalah Modal was adopted with addition of Waqf  2004- Incorporation of First General Takaful company in Pakistan  2005- SECP issued Takaful Rules for dedicated Takaful companies. Windows were not allowed  2007- Incorporation of First Family Takaful company. Total number of Takaful operators reached to Five  2012- SECP issued Takaful rules 2012, allowing conventional companies to open Takaful windows
  4. 4. Takaful Operational Models Mudarbah Practiced earlier, it is no longer in use. Wakalah This is the most prevalent model Wakalah+Waqf This model was suggested by Shari’ah Scholars in Pakistan. Cooperative Modal This modal is used only in Saudi Arabia and many scholars around the glob question it acceptability as Shariah compliant. • Takaful operational modals have been a source of debate since inception of Takaful which is still going-on with recent introduction of Saudi Cooperative Model
  5. 5. (USD) BILLON 187 # of Takaful Operators in 2012 Approx. 48 Window Operators 15 Irani Operators >18 Re-Takaful Operators Global Market Size of Takaful Source E&Y Report 2013 Worldwide Takaful Developments & Growth 4.2 5.4 7.1 8.3 9.4 10.9 0 2 4 6 8 10 12 2007 2008 2009 2010 2011 2012
  6. 6. Geographical Distribution of Global Takaful Volumes 51% 25% 16% 2% 5% 1% Saudi Arabia ASEAN GCC South Asia Africa Levant Source E&Y Report 2013 2012- Total Industry Size US$ 11 Billion
  7. 7. Gross Premium of Private sector Life Insurers/ Family Takaful operators - Pakistan EFU, 34% NJI, 35% ALICO, 12% East West, 1% ADAMJEE, 7% PQFT, 10% DFT, 2% EFU NJI ALICO East West ADAMJEE PQFT DFT Company Market Share 2012 JLI 35% EFU 34% ALICO 12% East West 1% ADAMJEE 7% PQFT 10% DFT 2% 2012- Total Industry Size RS. 34 Billion
  8. 8. Financial Performance- Average ROE Source: E&Y Global Takaful insight 2013
  9. 9. SWOT Analysis- Takaful Industry in Pakistan Source: E&Y Global Takaful insight 2013 Strengths Weaknesses • Boom in Life insurance, double digit rise in premium  Limited number of player in the market  Higher acceptability of Takaful in general public as Shariah complaint alternate to insurance • Under developed Life and General Insurance Market  Intense competition in many General Insurance lines.  Financial performance of most of the current Takaful operators is not upto the expectations Opportunities Threats  180 Million predominantly Muslim population  Very low insurance penetration. Over 90% population is uninsured  Rapid growth of Islamic Banking and Government’s willingness to grow this sector further  Overall business environment is not conducive for the growth or to attract international players  Competition from Window Takaful  Insurance penetration is unlikely to increase substantially in near future  Some Shariah scholars are still not convinced with current Takaful modal
  10. 10. Like Islamic Banking, Takaful is a reality which is here to stay FUTURE Takaful has the tremendous potential to grow exponentially in highly underinsured Muslim population provided it is done with its true sprit and whole heartedly supported by all the stakeholder
  11. 11. Jazaakum Allahu Khairan