EXPLORING GROWTH OF TAKAFUL MARKET IN PAKISTAN · 2014. 8. 19. · and the Grand Council of Islamic...

EXPLORING GROWTH OF TAKAFUL MARKET IN PAKISTAN

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Muhammad Kashif Siddiqee, ACA Joint Director - SECP

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All humans and/or Organizations inevitably are exposed to various types of “RISKS”; ◦ Life Risk; ◦ Health Risk; ◦ Property Risk; etcetera

These RISKS arise the need to mitigate these RISKS, throughout the human and/or organizational life;

The most widely available mean to mitigate RISKS around the globe is “INSURANCE”

THE NEED FOR INSURANCE

Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012

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The Council of Islamic Ideology (Pakistan) in1984, and the Grand Council of Islamic Scholars (Majama-al-Fiqh; Academy of the Organization of Islamic Conference) in 1985 delivered a majority decision stating that insurance is forbidden in Islam.

INSURANCE FROM ISLAMIC PERSPECTIVE


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All transactions undertaken by Muslims, including the purchase of insurance, should be shariah compliant and should avoid the following:

◦ Riba (payment/receipt of interest); ◦ Maisir (excessive risk taking); ◦ Gharar (uncertainty and unclear terms in contract); and ◦ Haram (investment in anything unacceptable and/or

forbidden by shariah)

UN-ISLAMIC ELEMENTS IN INSURANCE


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Name of Country Insurance Penetration (as a %age of G.D.P)

Name of Country Insurance Penetration (as a %age of G.D.P)

Pakistan 0.7% Australia 5.9%

United Arab Emirates 2.0% Hong Kong 11.5%

Saudi Arabia 0.8% Japan 10.1%

Oman 1.1% China 3.8%

Qatar 0.8% India 5.1%

Bahrain 2.6% Korea 11.2%

Turkey 1.3% United Kingdom 12.2%

Iran 1.4% Thailand 4.3%

Bangladesh 0.9% New Zealand 6%

Indonesia 1.5% Taiwan 18.4%

Kuwait 0.5% Singapore 6.2%

INSURANCE PENETRATION IN WORLD


Source: Arab Insurance Market Review 2011 and E&Y Global Insurance Outlook 2012

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No Muslim country falls amongst the top 10 countries of the world in terms of insurance premium volume.

The top 10 insurance companies of the world are host to the non-Muslim countries;

No Muslim country falls amongst the top 10 countries of the world in terms of insurance penetration.

The average insurance penetration in European countries in the year 2012 was 8.2%. The only Muslim country in Europe i.e. Turkey had the lowest insurance penetration amongst the European nations i.e. 1.3%, which is far below the average insurance penetration of Europe.

BRIEF FACTS


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INSURANCE & TAKAFUL COMPARISION IN PAKISTAN


55,734 66,107

75,505 83,998

98,526

119,781

129 330 800 1,464 2,232 3,330 0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2006 2007 2008 2009 2010 2011

GRO

SS P

REM

IUM

IN R

s. M

ILLI

ON

TIME

Insurance Companies

Takaful Operators

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SHARE OF INSURANCE & TAKAFUL SECTOR IN PAKISTAN


Insurance Companies

97%

Takaful Operators 3%

Insurance Companies

Takaful Operators

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Highlight the need for takaful / insurance

Comprehensive Training on

Takaful

Introduce custom made

products

Explore alternative channels of distribution

Increase the reach of Takaful

Strengthen the Capacity of

takaful service providers

WAY FORWARD


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Highlight the need for

takaful/insurance

Comprehensive Training on Takaful

Introduce custom made products



Strengthen the Capacity of takaful service providers

WAY FORWARD


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takaful/insurance


Takaful




Strengthen the Capacity of

takaful service providers

WAY FORWARD


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takaful/insurance






WAY FORWARD


13 9/7/2012


takaful/insurance


Takaful





WAY FORWARD


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takaful/insurance






WAY FORWARD


15 9/7/2012

THANKS


EXPLORING GROWTH OF TAKAFUL MARKET IN PAKISTAN · 2014. 8. 19. · and the Grand Council of Islamic...

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