KARACHI:
The entry of typical insurance coverage gamers into the Takaful market will lead to excessive development within the Shariah-compliant section of the business, mentioned EFU Life Assurance CEO Taher G Sachak.
The most important typical life insurance coverage firm within the personal sector when it comes to complete property, EFU Life Assurance grew to become the nation’s first firm to obtain regulatory approval in February to launch window Takaful operations.
With Rs50 million capital contribution to the statutory fund set as much as launch Islamic merchandise, EFU Life Assurance goals to attain “excessive development” within the Takaful section, significantly in preliminary years.
In a latest interview, Sachak mentioned the anticipated share of Takaful within the firm’s general gross premiums after three years is between 15% and 20%.
“EFU Life Assurance has already arrange 27 Takaful department workplaces in over 14 cities with a devoted gross sales power of greater than 300 consultants. Along with the sphere power, jobs have additionally been created in operations and coaching,” he mentioned.
After the introduction of laws governing the Islamic insurance coverage market, two full-fledged Takaful firms began working in Pakistan in 2007. Though these firms have grown considerably within the final eight years, their dimension relative to the traditional insurance coverage footprint in Pakistan remains to be miniscule.
Whole property of Pak-Qatar Household Takaful and Dawood Household Takaful on the finish of 2014 amounted to a bit over Rs9 billion. It equalled solely 6.5% of the whole property of personal typical life insurance coverage firms, which equalled Rs139.1 billion in 2014.
Takaful firms resisted the revised set of insurance coverage guidelines that the Securities and Trade Fee of Pakistan (SECP) launched in 2012. The principles allowed typical firms to promote Islamic merchandise by way of window operations. Saying that typical firms promoting Islamic merchandise would lead to cannibalisation, present Takaful gamers contested the regulator’s choice in courtroom. The 2-year-long authorized battle resulted in an out-of-court settlement final yr, thus paving the best way for the implementation of the brand new set of insurance coverage guidelines.
“The appearance of devoted Islamic banks has not stopped the expansion of typical banking and the identical phenomenon will apply to our Takaful enterprise – the dimensions of the pie will enhance,” Sachak mentioned.
Moreover being capital intensive, organising a subsidiary would have meant that the corporate couldn’t totally leverage its human capital, know-how and the substantial distribution channels and that might negate the target of selling Shariah-compliant merchandise, he added.
Identical to its typical enterprise, EFU Life Assurance runs three main distribution channels for its Takaful section: gross sales power together with devoted Takaful consultants, group household Takaful channel servicing company shoppers, and bancassurance, which is the sale of merchandise by way of business banks. Sachak says the corporate has tie-ups with seven banks this yr for its bancassurance distribution channel.
“With solely six personal gamers available in the market, (insurance coverage) remains to be thought-about to be in its infancy stage. There’s huge potential within the business and it’s certain to develop within the coming years,” he acknowledged.
Revealed in The Categorical Tribune, September 25th, 2015.
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