Window Takaful operators to file separate financial statements

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has advised insurers running Window Takaful operations to prepare a separate set of financial statements for general Takaful operations as a standalone Takaful operator, a statement said on Tuesday.
Earlier, the window Takaful operators were allowed to report assets and liabilities, revenues and expenses for each segment of conventional and Takaful business in consolidated books.
The new, standalone financial statements will also be subject to audit and review. Insurers have been advised to ensure that the financial statements for the periods ending June 2015 submitted with SECP are in compliance with these recent amendments in the rules.
Prior to May 2014, only dedicated companies were allowed to undertake Takaful operations.
The success prompted conventional companies to go for Takaful services through specialised windows.
Insurance companies, both general and life, were permitted to launch Takaful, the Islamic alternative to conventional insurance products in May last.
The regulator expects at least half of Pakistan’s 50 conventional insurers to eventually offer Takaful products.
Insurance penetration, measured as total premiums to gross domestic product, has hovered at 0.7 per cent of GDP for the last decade, and now stands at around one percent of the GDP.
Takaful has contributed marginally as the sector represents about five percent of the total insurance market, although this is expected to go into double digits. Conventional insurers are bigger in size and have operated for longer, whereas Takaful companies are on average, six to seven years old, so Shariah compliant products could have greater appeal for consumers, an official said.