It is an Arabic word which means “Guaranteeing each other”.Takaful comes from the Arabic root-word „kafala‟TA‟AWUN (mutual assistance) and TABARRU‟ (Gift, Giveaway, donation)Operationally, takaful refers to participants mutuallycontributing to a common fund with the purpose of havingmutual indemnity in the case of peril or loss.
Differences between Takaful & InsuranceWhat is Insurance?A tool for Risk Mitigation and Financial ProtectionA tool to enable people to save (Life Insurance)Key differences between Takaful and Insurance are:Risk Sharing Vs. Risk TransferWakeel Vs. GuarantorAmeen Vs. OwnerDifferent type of Contract
Pakistan – Overall Population: 6th amongst global nations. 166 m. Population in 2015: Still 6th . 193 m. Urbanization: Presently at 33% Urbanization by 2015: 39% GDP Per Capita: $753
Pakistan – Insurance Market Penetration of Insurance Pakistan: 0.7% of GDP India: more than 3% of GDP Iran: approx. 1% of GDP Family & General Companies Few Innovative Products. Very recent change in this area
Resistance to Insurance, and its benefits, due to different reasons. Non-Shariah compliant elements. Government regulations untested. Human resources for the sector. Education and Awareness. Marketing & Sales issues. Operational Issues.
Strong growth in the Islamic financial sector provides Takaful with a natural market. Massive untapped market in Pakistan for risk mitigation tools. Lack of govt. social safety net. Negligible provision of reliable health care by the govt. Ethical and Shariah compliant model for risk mitigation and financial protection. Ethical and Shariah compliant model for risk mitigation and financial protection
Mudaraba Model Wakala Model Wakala -Waqf ModelBasic Principle regarding TakafulPolicyholders cooperate among themselves for their common good.Every policyholder pays his subscription to help those who need assistance.Losses are divided and liabilities spread according to the community pooling system.Uncertainty is eliminated concerning subscription and compensation.It does not derive advantage at the cost of others.
PreambleDurationCancellation ClauseTakaful operators feeInvestment management shareSurplus distribution
Takaful is not only here to stay; it‟s going to GROW!It‟s ethical and Shariah compliant nature allows Takafulto overcome the inherent problems with Insurance.Pakistani market has challenges but also has a lot ofopportunities. There are a lot of opportunities forTakaful operators to make healthy profits in Pakistan.Although Insurance coverage is not the norm inPakistan we need to work to make Takaful somethingeverybody uses