‘Takaful share to increase to 50pc in five years’

KARACHI: Takaful— a Shariah-compliant alternative to conventional insurance is growing at a rapid pace and its share is expected to increase to 50 percent over the next five years, an industry official said.
Speaking during an exclusive interview with The News, M Nasir Ali Syed – CEO, Pak Qatar Family Takaful, said the total share of the insurance industry is almost 0.9 percent of the gross domestic product, whereas Islamic insurance makes up 13 percent of the insurance industry. “In the 190 million population of Pakistan, insurance penetration is very low where the bulk of the society is left uninsured,” he said. “This untapped financial protection market gives us a vast room to grow.” The CEO of PQFT mentioning the growth potential said, “The growing potential in Islamic insurance attracts the conventional insurance companies to create their separate Takaful divisions or windows, as its model and services attract customers.”
Syed said there are five dedicated Takaful operators in Pakistan in which three operators are serving in general and two are serving in family.Talking about the challenges the Islamic insurance providers face, he said, “The biggest challenge is awareness amongst masses. From human resource perspective, trained Takaful individuals are very less in the market.” Elaborating the role of the Securities and Exchange Commission of Pakistan (SECP) in promoting Islamic finance he said, “The SECP is a regulatory body in Pakistan, and insurance is one of its divisions to monitor. SECP maintains a supportive environment not only for the customers, but also for Takaful operators based on Shariah principles.” Syed revealed that his company is planning to introduce some new products in the market according to its need and wants in the near future.
When asked if similar to the developed world, it was mandatory by law for all citizens in Pakistan to insure every valuable asset they own, he responded in the affirmative. He said such laws exist in Pakistan too, but the real issue in our country was the lack of implementation and enforcement. “The affordability of insurance is also a major factor. As the high-income, upper class segment in Pakistan comprises of only four percent of the population. They can easily afford insurance but they have the power to avoid the regulations of the state, so they ignore the insurance laws,” he said. “Another 75 percent of our population falls in the impoverished lower class, so they cannot afford to buy insurance. Thus, the only segment of consumers available to the insurance and Takaful industry is the 20 percent middle income people, who can be convinced and regulated into getting their assets and life insured,” he added.
Syed said that the government of Pakistan does not have the budgets available to provide education and healthcare facilities to each and every Pakistani. So, the private sector insurance companies must continue to play their role in elevating the quality of life in the country.
“With the advent of Mobile banking, technology can facilitate the online purchase of insurance services through the internet and computer devices. We just need to create some fool-proof security features to make such online transactions completely safe,” the CEO of PQFT concluded.