Alhuda CIBE - Takaful an Emerging Market by Capt. M. Jamil Akhtar

1. TakafulTakaful
An emerging niche market
By:
Capt. M. Jamil Akhtar Khan
ACII, MCIT, Master Mariner
Chief Executive Officer
TAKAFUL PAKISTAN LIMITED
2 Days Specialized Training
Workshop
10th
& 11th
August 2007.
Al-HUDA CIBE

2. Outline of PresentationOutline of Presentation
 Introduction to TakafulIntroduction to Takaful
 Objections to Conventional InsuranceObjections to Conventional Insurance
 Difference b/w Conventional Insurance & TakafulDifference b/w Conventional Insurance & Takaful
 Takaful Through TimeTakaful Through Time
 Takaful ModelsTakaful Models
 Takaful TypesTakaful Types
 BancaTakafulBancaTakaful
 ReTakafulReTakaful
 Foundations of Takaful in PakistanFoundations of Takaful in Pakistan
 Takaful Prospects in PakistanTakaful Prospects in Pakistan
 Challenges to TakafulChallenges to Takaful
 Introduction toIntroduction to TAKAFUL PAKISTAN LIMITEDTAKAFUL PAKISTAN LIMITED

3. Introduction toIntroduction to
TakafulTakaful

4.  Takaful comes from the Arabic root-wordTakaful comes from the Arabic root-word
‘‘kafalakafala’ — guarantee.’ — guarantee.
 Takaful means mutual protection and jointTakaful means mutual protection and joint
guarantee.guarantee.
 Operationally, takaful refers to participantsOperationally, takaful refers to participants
mutually contributing to a common fund withmutually contributing to a common fund with
the purpose of having mutual indemnity inthe purpose of having mutual indemnity in
the case of peril or loss.the case of peril or loss.
Meaning of TakafulMeaning of Takaful

5. Reference — Al Quran:Reference — Al Quran:
 ““Help (ta’awan) one another in furtheringHelp (ta’awan) one another in furthering
virtue (birr) and Allah consciousnessvirtue (birr) and Allah consciousness
(taqwa) and do not help one another in(taqwa) and do not help one another in
furthering evil and enmity”. Al Maidah:furthering evil and enmity”. Al Maidah:
verse 2 (5:2).verse 2 (5:2).
 Takaful is a form of mutual help (ta’awun)Takaful is a form of mutual help (ta’awun)
in furthering good/virtue by helping othersin furthering good/virtue by helping others
who are in need / in hardship .who are in need / in hardship .

6. Reference – Hadith:Reference – Hadith:
 ““tie the camel first, then submittie the camel first, then submit
(tawakkal) to the will of Allah”(tawakkal) to the will of Allah”
The hadith implied a strategy toThe hadith implied a strategy to
mitigate/reduce risk.mitigate/reduce risk.
 Takaful provides a strategy of riskTakaful provides a strategy of risk
mitigation/reduction by virtue ofmitigation/reduction by virtue of
collective risk taking that distributes riskscollective risk taking that distributes risks
and losses to a large number ofand losses to a large number of
participants. This mitigates the otherwiseparticipants. This mitigates the otherwise
very damaging losses, if bornevery damaging losses, if borne
individually.individually.

7. Declaration by Shariah scholarsDeclaration by Shariah scholars
rendering conventional insurance un-rendering conventional insurance un-
IslamicIslamic
 Fatwa issued in Judicial Conference held inFatwa issued in Judicial Conference held in
Makkah in Shaban 1398 AH.Makkah in Shaban 1398 AH.
 Verdict of Supreme Court of Egypt on Dec.Verdict of Supreme Court of Egypt on Dec.
27, 1926.27, 1926.
 Unanimous resolutions and fatwa by UlamaUnanimous resolutions and fatwa by Ulama
in the Muslim League Conference in Cairoin the Muslim League Conference in Cairo
in 1965.in 1965.
 Unanimous decision by Muslim Scholars inUnanimous decision by Muslim Scholars in
seminar held in Morocco on May 6, 1972.seminar held in Morocco on May 6, 1972.

8. Judicial Opinions and FatwasJudicial Opinions and Fatwas
confirming validity of Takafulconfirming validity of Takaful
 Fatwa issued by Higher Council of SaudiFatwa issued by Higher Council of Saudi
Arabia in 1397 A.H.Arabia in 1397 A.H.
 Fatwa Issued by the Fiqh Council of MuslimFatwa Issued by the Fiqh Council of Muslim
World League in 1398 A.H.World League in 1398 A.H.
 Fatwa issued by the Fiqh Council of theFatwa issued by the Fiqh Council of the
OIC in 1405 A.H.OIC in 1405 A.H. (1985)(1985)..

9. Fiqh Academy Resolution 1985Fiqh Academy Resolution 1985
• IslamicIslamic Fiqh (science of Shariah) AcademyFiqh (science of Shariah) Academy, emanating, emanating
from the Organization of Islamic Conference, meeting infrom the Organization of Islamic Conference, meeting in
its Second Session in Jeddah, KSA, from 10 to 16 Rabi-ul-its Second Session in Jeddah, KSA, from 10 to 16 Rabi-ul-
Thani, 1405 A.H. (Dec 1985) issued a Resolution which inThani, 1405 A.H. (Dec 1985) issued a Resolution which in
summary stated the following:summary stated the following:
• TheThe commercial Insurancecommercial Insurance contract…contract… is prohibitedis prohibited
(Haraam)(Haraam) according to theaccording to the Shariah.Shariah.
• The alternativeThe alternative TakafulTakaful contract which conforms to thecontract which conforms to the
principles of Islamic dealingsprinciples of Islamic dealings is Halaalis Halaal, being the contract, being the contract
ofof cooperative insurancecooperative insurance, which is founded on the basis of, which is founded on the basis of
charitable donationcharitable donation andand Shariah compliant dealingsShariah compliant dealings..

10. Basic Elements of TakafulBasic Elements of Takaful
 Mutuality and cooperation.Mutuality and cooperation.
 Takaful contract pertains toTakaful contract pertains to Tabarru’atTabarru’at as againstas against
mu’awadatmu’awadat in case of conventional insurance.in case of conventional insurance.
 Payments made with the intention of TabarruPayments made with the intention of Tabarru
(contribution)(contribution)
 Eliminates the elements of Gharrar, Maisir andEliminates the elements of Gharrar, Maisir and
Riba.Riba.
 Wakalah/Modarabah basis of operations.Wakalah/Modarabah basis of operations.
 Joint Guarantee / Indemnity amongst participantsJoint Guarantee / Indemnity amongst participants
– shared responsibility.– shared responsibility.
 Constitution of separate “Participants’ TakafulConstitution of separate “Participants’ Takaful
Fund”.Fund”.
 Constitution of “Shariah Supervisory Board.”Constitution of “Shariah Supervisory Board.”
 Investments as per Shariah.Investments as per Shariah.

11. Main drivers of TakafulMain drivers of Takaful
 Piety (individual purification)Piety (individual purification)
 Brotherhood (mutual assistance)Brotherhood (mutual assistance)
 Charity (Tabarru or contribution)Charity (Tabarru or contribution)
 Mutual GuaranteeMutual Guarantee
 Community well-being as opposed to profitCommunity well-being as opposed to profit
maximization.maximization.

12. Objections toObjections to
ConventionalConventional
InsuranceInsurance

13. Insurance DefinedInsurance Defined
 Definition of an Insurance ContractDefinition of an Insurance Contract
 ““AnAn agreementagreement whereby one party,whereby one party, the insurerthe insurer, in, in
return for a consideration,return for a consideration, the premiumthe premium, undertakes, undertakes
to pay to the other party,to pay to the other party, the insuredthe insured, a sum of, a sum of
money or its equivalent in kind on the happening ofmoney or its equivalent in kind on the happening of
a specified event, which is contrary to the insured’sa specified event, which is contrary to the insured’s
financial interest”financial interest”
 Subject-matter of an Insurance ContractSubject-matter of an Insurance Contract
 “…“… what is it that is insured in a fire policy? Not thewhat is it that is insured in a fire policy? Not the
bricks and materials used in building the house, butbricks and materials used in building the house, but
thethe financial interestfinancial interest (i.e. money) of the insured in(i.e. money) of the insured in
the subject-matter of insurance …”the subject-matter of insurance …”
(Lord Justice Brett in Castellian v. Preston – 1883)(Lord Justice Brett in Castellian v. Preston – 1883)

14. Objections to ConventionalObjections to Conventional
InsuranceInsurance
 Scholars view the insurance contract as anScholars view the insurance contract as an
exchange contract – money is being exchanged forexchange contract – money is being exchanged for
money over time.money over time.
 This brings about the problem ofThis brings about the problem of gharrargharrar (which(which
leads toleads to maisirmaisir) and in investments aspect,) and in investments aspect, ribariba..
 Elements of:Elements of:
• Uncertainty –Uncertainty – GharrarGharrar
• Gambling –Gambling – MaisirMaisir
• Interest –Interest – RibaRiba
• UW + Investment Profit belongs to theUW + Investment Profit belongs to the
CompanyCompany
 Note that the Scholars do not object to insuranceNote that the Scholars do not object to insurance
per seper se but only to certain weaknesses in thebut only to certain weaknesses in the
insurance contract.insurance contract.

15. Uncertainty – GharrarUncertainty – Gharrar
 Conventional insurance contract is basically aConventional insurance contract is basically a
contract of exchange (mu’awadat) i.e. buying andcontract of exchange (mu’awadat) i.e. buying and
selling whereby policy (indemnity) is sold as goods,selling whereby policy (indemnity) is sold as goods,
with the premium as the price or consideration.with the premium as the price or consideration.
 The consideration must be certain for exchangeThe consideration must be certain for exchange
contract.contract.
 GharrarGharrar in insurance contracts pertains toin insurance contracts pertains to
“deliverability” of subject matter, i.e. uncertainty as“deliverability” of subject matter, i.e. uncertainty as
to:to:
 Whether the insured will get the compensationWhether the insured will get the compensation
promised?promised?
 How much the insured will get?How much the insured will get?
 When will the compensation be paid?When will the compensation be paid?
 Thus, it involves an element of uncertainty in theThus, it involves an element of uncertainty in the
subject matter of the insurance sales contract, whichsubject matter of the insurance sales contract, which
renders it void under the Islamic law.renders it void under the Islamic law.

16. Gambling – MaisirGambling – Maisir
 ““Insurance is a contract upon speculation. GoodInsurance is a contract upon speculation. Good
faith forbids either party from concealing what hefaith forbids either party from concealing what he
privately knows, to draw the other into a bargain,privately knows, to draw the other into a bargain,
from his ignorance of that fact, and his believing tofrom his ignorance of that fact, and his believing to
the contrary”the contrary” (Lord Mansfield in Carter v. Boehm(Lord Mansfield in Carter v. Boehm
– 1766).– 1766).
 The insured loses the money paid for the premiumThe insured loses the money paid for the premium
when the insured event does not occur.when the insured event does not occur.
 The company will be in deficit if claims are higherThe company will be in deficit if claims are higher
than premium.than premium.

17. Interest – RibaInterest – Riba
 “ …“ …. Allah has permitted trading and. Allah has permitted trading and
forbidden riba” (Al Baqarah 2 : 275).forbidden riba” (Al Baqarah 2 : 275).
 Insurance funds are invested in financialInsurance funds are invested in financial
instruments which contain the element ofinstruments which contain the element of
Riba.Riba.

18. Comparing Takaful to Conventional InsuranceComparing Takaful to Conventional Insurance
IssueIssue Conventional InsuranceConventional Insurance TakafulTakaful
Organization PrincipleOrganization Principle Profit for shareholdersProfit for shareholders Mutual for participantsMutual for participants
BasisBasis Risk TransferRisk Transfer Co-operative risk sharingCo-operative risk sharing
Value PropositionValue Proposition Profits maximizationProfits maximization Affordability and spiritualAffordability and spiritual
satisfactionsatisfaction
LawsLaws Secular/RegulationsSecular/Regulations Sharia plus regulationsSharia plus regulations
OwnershipOwnership ShareholdersShareholders ParticipantsParticipants
Management statusManagement status Company ManagementCompany Management OperatorOperator
Form of ContractForm of Contract Contract of SaleContract of Sale Cooperative,Cooperative,
Islamic contracts of Wakala orIslamic contracts of Wakala or
Mudarbah with Tabar’ruMudarbah with Tabar’ru
(contributions)(contributions)
InvestmentsInvestments Interest basedInterest based Sharia compliant, Riba-freeSharia compliant, Riba-free
SurplusSurplus Shareholders’ accountShareholders’ account Participants’ accountParticipants’ account

19. TakafulTakaful Through TimeThrough Time

20. Takaful through TimeTakaful through Time
 Origins in the First Constitution of Madina.Origins in the First Constitution of Madina.
 It evolved and continued in one form or the otherIt evolved and continued in one form or the other
throughout the Abbaside period and even later during thethroughout the Abbaside period and even later during the
Ottoman empire.Ottoman empire.
 Serious efforts were made in modern times, in 1970s toSerious efforts were made in modern times, in 1970s to
come up with an Islamic alternative to the conventionalcome up with an Islamic alternative to the conventional
insurance.insurance.
 The first Takaful company was set up in Sudan in 1979,The first Takaful company was set up in Sudan in 1979,
almost simultaneously followed by another one set up inalmost simultaneously followed by another one set up in
Bahrain.Bahrain.

21. Takaful through Time…Takaful through Time… (Cont’d.)(Cont’d.)
 There are nowThere are now 85+85+ Takaful companies in over 25Takaful companies in over 25
countries.countries.
 The total insurance premium of OIC countries for 2004The total insurance premium of OIC countries for 2004
was USD 50 Billion; of this, Takaful contributionwas USD 50 Billion; of this, Takaful contribution
accounts for 5% (i.e. USD 2.5 Billion). This is expected toaccounts for 5% (i.e. USD 2.5 Billion). This is expected to
increase to USD 15 Billion by 2015.increase to USD 15 Billion by 2015.
 Poor Insurance penetration in the Muslim countries (<1%Poor Insurance penetration in the Muslim countries (<1%
of GDP).of GDP).
 Average growth rate higher than conventional insuranceAverage growth rate higher than conventional insurance
companies (around 25%).companies (around 25%).
 Non–Muslims increasingly opting for Takaful products forNon–Muslims increasingly opting for Takaful products for
commercial benefits.commercial benefits.

23. Takaful ModelsTakaful Models

24. MudarabaMudaraba ModelModel
 The surplus is shared between theThe surplus is shared between the
participants with a takaful operator. Theparticipants with a takaful operator. The
sharing of such profit (surplus) may be in asharing of such profit (surplus) may be in a
ratio 5:5 , 6:4 etc. as mutually agreedratio 5:5 , 6:4 etc. as mutually agreed
between the contracting parties. Generally,between the contracting parties. Generally,
these risk sharing arrangements allow thethese risk sharing arrangements allow the
takaful operator to share in the underwritingtakaful operator to share in the underwriting
results from operations as well as theresults from operations as well as the
favourable performance returns on investedfavourable performance returns on invested
premiums.premiums.

25. Profits
attributable
to
Shareholders
Company’s
Admin. &
Mangt.
Expenses
Takaful
Contribution
paid by
Participant
General
Takaful
Fund
General
Takaful
Fund
Operational
Cost of
Takaful
Surplus
(Profit)
Participant’s
Share
from Surplus
Company’s
Share from
Surplus
Investment
By
Company
Profit
From
Investments
Company
Participant
Mudaraba Model

26. Wakala ModelWakala Model
 Cooperative risk sharing occurs amongCooperative risk sharing occurs among
participants where a takaful operator earns aparticipants where a takaful operator earns a
fee for services (as a Wakeel or Agent) andfee for services (as a Wakeel or Agent) and
does not participate or share in anydoes not participate or share in any
underwriting results as these belong tounderwriting results as these belong to
participants as surplus or deficit. Under theparticipants as surplus or deficit. Under the
Al- Wakala model, the operator may alsoAl- Wakala model, the operator may also
charge a fund management fee andcharge a fund management fee and
performance incentive fee.performance incentive fee.

27. General
Takaful
Fund
Operational
Cost of
Takaful/
ReTakaful
Surplus
(Profit)
Surplus
Distribution
to
Participants
Participants’
Takaful Fund
Wakala Model
Takaful
Contribution
paid
by Participant
Company
(Capital)
Mudarib's’
Share
of PTF’s
Investment
Income
Management
Expense
of the Company
Profit/Loss
attributable to
Shareholders
Wakala
Fee
(30% to 35%)
Profit
From
Investments
Investment
Income
Reserves
Investment by
the Company
Investment Income Sharing
on Mudaraba Basis

28. Wakala -Waqf Model
It is a WAKALAH model with a separate legal entity of WAQF in-It is a WAKALAH model with a separate legal entity of WAQF in-
between.between.
 The relationship of the participants and the operator is directlyThe relationship of the participants and the operator is directly
with the WAQF fund. The operator is the ‘Wakeel’ of the fundwith the WAQF fund. The operator is the ‘Wakeel’ of the fund
and the participants pay contribution to the WAQF fund by wayand the participants pay contribution to the WAQF fund by way
of Tabarru.of Tabarru.
 The contributions received would also be a part of this fund andThe contributions received would also be a part of this fund and
the combined amount will be used for investment and the profitsthe combined amount will be used for investment and the profits
earned would again be deposited into the same fund which alsoearned would again be deposited into the same fund which also
eliminates the issue of Gharar.eliminates the issue of Gharar.
 Losses to the participant are paid by the company from the sameLosses to the participant are paid by the company from the same
fund.fund.
 Operational expenses that are incurred for providing TakafulOperational expenses that are incurred for providing Takaful
services are also met from the same fund.services are also met from the same fund.

29. Investment
Income
Operational
Cost of Takaful
/ ReTakaful
Claims &
Reserves Surplus
(Balance)
P A R T I C I P A N T S’ T A K A F U L F U N D
(P.T.F.)
Mudarib’s
Share of PTF’s
Investment
Income
Wakalah
Fee
Investmen
t
Income
Management
Expense of
the
Company
Profit/Loss
S H A R E H O L D E R S’ F U N D (S.H.F.)
Participant
WAQF
Takaful
Operator
Share
Holder
Wakala-Waqf Model
Investment by
the Company

30. Models – The beauty of Islam liesModels – The beauty of Islam lies
in itsin its
plurality … !plurality … !

31. ISLAM
AQIDAH
Faith & Belief
SHARIAH
Practices & Activities
AKHLAQ
Moralities & Ethics
IBADAH
Man-to-God Worship
MUAMALAT
Man-to-Man Activities
Social
Activities
Economic
Activities
Political
Activities
Risk Management
Takaful

32. General Takaful TypesGeneral Takaful Types
 General Takaful –General Takaful – offers all kinds of non-offers all kinds of non-
life risk coverage. It is normally divided intolife risk coverage. It is normally divided into
following classes:following classes:
 Property TakafulProperty Takaful
 Marine TakafulMarine Takaful
 Motor TakafulMotor Takaful
 Miscellaneous TakafulMiscellaneous Takaful

33. Types of Family TakafulTypes of Family Takaful
 Term Life TakafulTerm Life Takaful
 Whole Life TakafulWhole Life Takaful
 Endowment TakafulEndowment Takaful
 Universal TakafulUniversal Takaful
 Marriage PlanMarriage Plan
 Education PlanEducation Plan

34. Takaful Policy Document /Takaful Policy Document /
Participants’ Membership DocumentParticipants’ Membership Document
 Preamble:Preamble:
 This is to acknowledge that the applicant (hereinafter called theThis is to acknowledge that the applicant (hereinafter called the
'Participant'), as more fully described in the schedule hereto:'Participant'), as more fully described in the schedule hereto:
 i.i. Is accepted as a member of the Participants' Takaful FundIs accepted as a member of the Participants' Takaful Fund
(hereinafter called the 'Fund') operated by Takaful Pakistan Limited(hereinafter called the 'Fund') operated by Takaful Pakistan Limited
(hereinafter called the 'Company').(hereinafter called the 'Company').
 ii.ii. Being a member of the Fund, he/she is acknowledged as aBeing a member of the Fund, he/she is acknowledged as a
beneficiary under the attached Indemnity Policy of the Fund, and of thebeneficiary under the attached Indemnity Policy of the Fund, and of the
benefits declared by the Fund from time to time under this policy, inbenefits declared by the Fund from time to time under this policy, in
accordance with the Waqf rules governing the Fund.accordance with the Waqf rules governing the Fund.
 iii.iii. Subject to the participant continuing as a member of the FundSubject to the participant continuing as a member of the Fund
and complying with his/her undertaking under his/her declarationand complying with his/her undertaking under his/her declaration
made in the proposal form, he/she is indemnified by the Fund as one ofmade in the proposal form, he/she is indemnified by the Fund as one of
its beneficiaries against the perils/events described, in the manner andits beneficiaries against the perils/events described, in the manner and
to the extent as stated hereunder.to the extent as stated hereunder.

35. Takaful Policy Document /Takaful Policy Document /
Participants’ Membership DocumentParticipants’ Membership Document
 Duration:Duration:
 Normally policies are issued for the duration ofNormally policies are issued for the duration of
twelve months.twelve months.
 Extended coverage on project policies.Extended coverage on project policies.
 MARINE POLICY :MARINE POLICY : The membership under thisThe membership under this
document shall be for the period of _________document shall be for the period of _________
months. However, the benefits under thismonths. However, the benefits under this
document, except Surplus if any, shall cease on thedocument, except Surplus if any, shall cease on the
arrival of goods at destination.arrival of goods at destination.

36. Takaful Policy Document /Takaful Policy Document /
Participants’ Membership DocumentParticipants’ Membership Document
 Cancellation Clause:Cancellation Clause:
 This Policy may at any time be terminated at theThis Policy may at any time be terminated at the
option of the Company, on 14 days' notice to thatoption of the Company, on 14 days' notice to that
effect being given to the Participant at his last knowneffect being given to the Participant at his last known
address. In that case, the Participant shall beaddress. In that case, the Participant shall be GIVENGIVEN
an amount equivalentan amount equivalent to a ratable proportion of theto a ratable proportion of the
contribution for the unexpired Period of Policy fromcontribution for the unexpired Period of Policy from
the date of such cancellation. This Policy my also bethe date of such cancellation. This Policy my also be
terminated at any time at the request of theterminated at any time at the request of the
Participant, in which case the Participant will beParticipant, in which case the Participant will be
PAID an amount equivalentPAID an amount equivalent to the actual contributionto the actual contribution
made initially by him/her, less the amount worked asmade initially by him/her, less the amount worked as
per the following scale applicable to the period duringper the following scale applicable to the period during
which the policy has been in force:which the policy has been in force:

37. Takaful Policy Document /Takaful Policy Document /
Participants’ Membership DocumentParticipants’ Membership Document
 TAKAFUL OPERATOR'S FEETAKAFUL OPERATOR'S FEE
 The Company shall deduct Takaful Operator's fee outThe Company shall deduct Takaful Operator's fee out
of the Contribution received under this Policy. Suchof the Contribution received under this Policy. Such
fee shall be based on the Wakala principle since thefee shall be based on the Wakala principle since the
Company hereby acts as a Wakeel on behalf of theCompany hereby acts as a Wakeel on behalf of the
Fund.Fund.
 INVESTMENT MANAGEMENT SHAREINVESTMENT MANAGEMENT SHARE
 The Company shall act as a Mudarib for the purposeThe Company shall act as a Mudarib for the purpose
of managing the investment of the Participant'sof managing the investment of the Participant's
Contribution. As such, the Company stands entitled toContribution. As such, the Company stands entitled to
a share in the investment income thereof as Mudarib.a share in the investment income thereof as Mudarib.

38. Takaful Policy Document /Takaful Policy Document /
Participants’ Membership DocumentParticipants’ Membership Document
 SURPLUS DISTRIBUTIONSURPLUS DISTRIBUTION
 If, at the end of the period of Policy stated inIf, at the end of the period of Policy stated in
the Schedule, there is a surplus in the Generalthe Schedule, there is a surplus in the General
Takaful Fund, the same shall be distributedTakaful Fund, the same shall be distributed
among the Participants. Provided that, in caseamong the Participants. Provided that, in case
the Participant has made any claim orthe Participant has made any claim or
received any benefits under this Policy, thatreceived any benefits under this Policy, that
claimed amount shall be deducted from theclaimed amount shall be deducted from the
net amount worked out as due to thenet amount worked out as due to the
Participant.Participant.

39. BANCATAKAFULBANCATAKAFUL
 BackgroundBackground
 Range of ProductsRange of Products
 SavingsSavings →→ Personal Accident,Personal Accident,
Homeowners’ Comprehensive, CreditHomeowners’ Comprehensive, Credit
Cards, etc.Cards, etc.
 Financing, IndividualsFinancing, Individuals → Car Ijarah,→ Car Ijarah,
Housing Musharika, Mortgage Takaful.Housing Musharika, Mortgage Takaful.
 Financing, SMEsFinancing, SMEs → Trade Credit Takaful,→ Trade Credit Takaful,
Business, Office, Equipment, Assets.Business, Office, Equipment, Assets.
 E-CommerceE-Commerce

40. BANCATAKAFUL (…Cont’d.)BANCATAKAFUL (…Cont’d.)
Advantages of BancaTakaful:Advantages of BancaTakaful:
 Facilitation Desk / Equipment.Facilitation Desk / Equipment.
 Fast Turnaround Time.Fast Turnaround Time.
 One-Stop shop for Clients.One-Stop shop for Clients.
 Concept of Islamic Financial Supermarket.Concept of Islamic Financial Supermarket.
 Value Added Services.Value Added Services.
 Law of Large Numbers.Law of Large Numbers.
 Lower Contribution Rates.Lower Contribution Rates.
 Attraction for Depositors.Attraction for Depositors.
 Synergy.Synergy.

41. ReTakafulReTakaful
 Currently few ReTakaful companies worldwide offering aCurrently few ReTakaful companies worldwide offering a
relatively small capacity:relatively small capacity:
 Sudan (1979) National Reinsurance.Sudan (1979) National Reinsurance.
 Sudan (1983) Sheikhan Takaful Company.Sudan (1983) Sheikhan Takaful Company.
 Bahamas (1983) Saudi Islamic Takaful and ReTakafulBahamas (1983) Saudi Islamic Takaful and ReTakaful
Company.Company.
 Bahrain/Saudi Arabia (1985) Islamic Insurance andBahrain/Saudi Arabia (1985) Islamic Insurance and
Reinsurance Company.Reinsurance Company.
 Tunisia (1985)Tunisia (1985) B.E.S.T. ReB.E.S.T. Re
 Malaysia (1997)Malaysia (1997) ASEAN ReTakafulASEAN ReTakaful International.International.
 Dubai (2005)Dubai (2005) TakafulReTakafulRe by ARIG.by ARIG.
 Lloyds of London to have a ReTakaful Syndicate in 2007.Lloyds of London to have a ReTakaful Syndicate in 2007.
 SwissRe has formed a separate ReTakaful PoolSwissRe has formed a separate ReTakaful Pool
 MunichRe to form a separate ReTakaful PoolMunichRe to form a separate ReTakaful Pool
 Provision in Takaful Rules – 2005.Provision in Takaful Rules – 2005.

42. Objectives
Resolution
1949 1992
1983
Review by Council
of Islamic Ideology
Report by the
Council
2000
Insurance
Ordinance
2005
Takaful
Rules
T I M E L I N E – T A K A F U L I N P A K I S T A N
2006
TAKAFUL
PAKISTAN
LIMITED

43. Takaful Prospects in PakistanTakaful Prospects in Pakistan
 97% Muslim population.97% Muslim population.
 Demand for insurance increasing with increase inDemand for insurance increasing with increase in
per capita income.per capita income.
 Personal lines insurance business (leasing, health,Personal lines insurance business (leasing, health,
Medicare) growing at a higher rate than otherMedicare) growing at a higher rate than other
conventional classes.conventional classes.
 Islamic banking on sound footing with support ofIslamic banking on sound footing with support of
the Govt.the Govt.

44.  People who do not insure due toPeople who do not insure due to
religious reasons.religious reasons.
 People who insure and are insensitive toPeople who insure and are insensitive to
religious reasons.religious reasons.
 People who currently do not insure at all.People who currently do not insure at all.
TAKAFUL - TARGET MARKETTAKAFUL - TARGET MARKET

45. Challenges to TakafulChallenges to Takaful
 Skepticism.Skepticism.
 Lack of uniformity in Shariah decisions.Lack of uniformity in Shariah decisions.
 ‘‘Windows’ issue.Windows’ issue.
 Regulatory issues.Regulatory issues.
 Capacity constraints due to inadequateCapacity constraints due to inadequate
ReTakaful.ReTakaful.
 Limited Investment avenues.Limited Investment avenues.
 H.R. issues.H.R. issues.

46. Introduction toIntroduction to
TAKAFUL PAKISTANTAKAFUL PAKISTAN
LIMITEDLIMITED

47. TAKAFUL PAKISTAN LIMITEDTAKAFUL PAKISTAN LIMITED
 Takaful Pakistan is a joint venture of prestigious localTakaful Pakistan is a joint venture of prestigious local
& foreign institutions, including:& foreign institutions, including:
 House Building Finance Corporation.House Building Finance Corporation.
 Emirates Global Islamic Bank.Emirates Global Islamic Bank.
 Arif Habib Securities.Arif Habib Securities.
 Sitara Chemicals.Sitara Chemicals.
 Emirates Investment Group (Sharjah).Emirates Investment Group (Sharjah).
 Al-Buhaira National Insurance Co. (U.A.E.)Al-Buhaira National Insurance Co. (U.A.E.)
 Large initial paid-up Capital.Large initial paid-up Capital.

48. TAKAFUL PAKISTAN LIMITED … (Cont’d.)TAKAFUL PAKISTAN LIMITED … (Cont’d.)
 Managed by dedicated professionals, committed to theManaged by dedicated professionals, committed to the
cause.cause.
 ReTakaful arrangements with a consortium ofReTakaful arrangements with a consortium of
internationally reputed ReTakaful operators.internationally reputed ReTakaful operators.
 Shariah Board comprises of eminent scholars.Shariah Board comprises of eminent scholars.
 BancaTakaful and MicroTakaful products.BancaTakaful and MicroTakaful products.
 We intend to be the trend-setter for excellent Clients’We intend to be the trend-setter for excellent Clients’
Servicing, Operational bench marks and prudentServicing, Operational bench marks and prudent
Underwriting practices.Underwriting practices.

49. ConclusionConclusion
 Takaful defined.Takaful defined.
 Comparison with conventional insurance.Comparison with conventional insurance.
 Takaful ModelsTakaful Models
 Takaful TypesTakaful Types
 BancaTakafulBancaTakaful
 ReTakafulReTakaful
 Takaful Pakistan LimitedTakaful Pakistan Limited

50. Thank you for your attentionThank you for your attention