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EXPLORING GROWTH OF TAKAFUL MARKET IN PAKISTAN
1
Muhammad Kashif Siddiqee, ACA Joint Director - SECP
2 9/7/2012
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
3 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
4 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
5 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
Source: Arab Insurance Market Review 2011 and E&Y Global Insurance Outlook 2012
6 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
7 9/7/2012
INSURANCE & TAKAFUL COMPARISION IN PAKISTAN
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
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
8 9/7/2012
SHARE OF INSURANCE & TAKAFUL SECTOR IN PAKISTAN
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
Insurance Companies
97%
Takaful Operators 3%
Insurance Companies
Takaful Operators
9 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
10 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
11 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
12 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
13 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
14 9/7/2012
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
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012
15 9/7/2012
THANKS
Exploring Growth of Takaful Market in Pakistan/ Islamic Finance News (IFN) Roadshow – 2012