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Takaful products need to come up to expectation, magnetism

Takaful products need to come up to expectation, magnetism

Interview with Dr. Syed Arif Hussain — a seasoned professional of East West Insurance Company Limited

Profile: Dr. Syed Arif Hussain, a seasoned professional, has brought to East West Insurance Company Limited-Widow Takaful Operations his expertise in management, resource development, marketing and execution of business strategies. His professional experience is spread over 22 years at progressive senior level positions and has the experience of underwriting, reinsurance, claims management and marketing with the State Life Insurance Corporation of Pakistan, Dawood Family Takaful Limited and as a Chief Executive Officer he headed Takaful Pakistan Limited and Excel Insurance Company Limited. His expertise includes life, health and project related insurances/Takaful schemes. He has extensive experience in restructuring, insurance operations and automation. He has attended a number of insurance/Takaful and management related workshops and conferences conducted locally and internationally.

East West Insurance Company Limited

was registered in 1983 by the Controller of Insurance, Government of Pakistan with the business objective to underwrite all classes of general insurance businesses and has been licensed by SECP as per “Takaful Rules 2012” of Window Takaful Operations to conduct Takaful business. Takaful is the Shariah-compliant alternative to conventional insurance schemes. The company has acquired IFS rating “A+” by Pakistan Credit Rating Agency (PACRA). With the objective of providing and delivering the best, the organization is operational all over the country. The is bonafide member of the Insurance Association of Pakistan and is also listed with the Pakistan Stock Exchange. The balance sheet reflects the financial soundness of the company with sizeable paid-up capital of Rs. 762 million, Equity Rs. 1.123 billion, and reserves exceeding Rs. 133 million. The company’s highly-liquid investment exceeds Rs. 1.07 billion.

PAKISTAN & GULF ECONOMIST had exclusive conversation with Dr. Syed Arif Hussain about the insurance sector. Following are the excerpts of the conversation:

Since the year 2000 the insurance sector has witnessed lots of changes and improvement in the area of Regulation, Market, infrastructure, and Technology. During last two decades, following rules have been introduced by the Securities and Exchange Commission of Pakistan (SECP):

  1. Insurance Ordinance -2000
  2. Insurance Rules 2002 & 2017
  3. Takaful Rules 2005 & 2012

In the year 2005, the Takaful rules were introduced by SECP, by which five dedicated Takaful companies were able to get license to market the Islamic insurance:-Takaful products. After seven years in the year 2012, SECP introduced Takaful Rules-2012, by which Conventional Insurance Companies may open their window Takaful operations, almost all big insurance companies both Life and Non-Life have started their window Takaful operations. The insurance and Takaful companies are now more active in the market by using publicity via print and electronic media; they are also using technology to sell their products on line. More activity is also seen in the field of health and micro-Insurance by the government and the companies.

Unfortunately the awareness of insurance is very low in our country due to low literacy rate. The awareness among the population may be increased by advertisement especially through social media.

However after introduction of Takaful the views have changed but still masses are reluctant to purchase the insurance/Takaful, may be due to lack of confidence on companies or lack of purchasing power, they still do not realize the importance of insurance. But they are showing their interest to take health policies for their families. The estimated 210 million population of Pakistan represents a huge market for Takaful and insurance industry. With this large population the prospects of insurance/Takaful is very bright. The potential of insurance growth in Pakistan is too much in all areas of insurance classes because the penetration of insurance is negligible as compared to the population of the country.

To tap the huge market, injection of creative products is the need of the time. Some of the gaps in the market include crop coverage and livestock coverage or professional indemnity for engineers and doctors. Needless to say it is an uphill task and perhaps greater effort is needed to create awareness among the users.


Given that wealth management is another aspect of insurance/Takaful, the product plate may be expanded to tweak the existing model. At the community level, the low income household staff is provided protection in times of medical emergencies and health by their employers. However, the poor are in an invisible bonded labor as they are willing to work for barely sustainable salaries in the hope of getting bailed out when going gets tough, so the health insurance is need of the day for such class of population. The progress of insurance industry is directly related with the progress of economy of the country. Political uncertainty badly effects on the growth of economic which ultimately effects on insurance business. The provincial and federal governments charge separately tax on gross written premium/contribution which leads to extra burden i.e. 15% to 17% on the client. Provinces are charging different percentages of tax, which should be reduced and be uniform. The government may also play its role to implement the Compulsory Group Life Insurance for every industrial or commercial establishment, where 10 or more workers are employed.

Since Takaful companies are relatively at their initial stage as compared to conventional insurance, Takaful companies follow the similar marketing approach as of conventional insurance. In our country the insurance is sold, not purchased. At present the Takaful industry largely depends on the business of Islamic banking/finance; hence the size of Islamic banking/finance is very small as compare to the conventional banking/finance, so the Takaful industry does not grow as fast as it can. That is why it is imperative to allow Takaful industry to do the business with conventional banks. In my opinion the Takaful industry should introduce some tailor-made products and their approach should be to cater the specific needs of a client to attract. In this way they may attack the large part of the un-tapped market, which is around 60% in Pakistan. The main reason of this un-tapped market is either they are not properly approached by the companies or they refuse to take insurance coverage due to their Islamic believes. Now it is an opportunity for Takaful companies to properly approach them and provide coverage as per their need.

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