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Pakistan Takaful industry entering a new era?

The Pakistani Securities and Exchange Commission (SECP) has set out new rules to regulate the country's Takaful business in light of recommendations made by a committee originally set up five years ago.

SECP Chairman Mohammad Ali unveiled the new regulations on 20 July. The Takaful Rules 2012 replace regulations established in 2005. Over the past seven years, stakeholders had brought to the notice of the authorities a number of problems with these rules. To address these concerns, the committee examined different aspects of the trade. The areas included coherence with accounting provisions of the SEC (Insurance) Rules of 2002, guidelines for allowing conventional insurance companies to do Takaful business through specialised 'window' operations, prescribing of percentages in respect of various modes of Shari'ah-compliant investments for determining solvency.

Commissioner (Insurance) Mohammed Asif Arif said, at present, three general Takaful (non-life insurance) and two family Takaful (life insurance) companies, were operating in the country. He went on to say,"After some time conventional insurance companies will also be allowed to offer Takaful products." This step would make Pakistan only the second country in the world, after Indonesia, to have introduced window Takaful operations.

In response to the new regulations, Muhammad Zubair Mughal, Chief Executive Officer of AlHuda Centre of Islamic Banking and Economics described the Takaful Rules 2012 as 'a good step for Takaful industry'

Looking at the broader insurance industry in Pakistan, while insurance penetration in Pakistan is less than one per cent, he said that there are 37 general insurance companies, seven life insurance companies, and five Takaful and Re-Takaful companies operating in Pakistan now. In accordance with the Takaful Rules 2012, more than 40 insurance companies may start window operation of T

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Publication:CPI Financial
Geographic Code:9PAKI
Date:Aug 2, 2012
Words:297
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