An interview with Mrs. N.K. Hasan, Deputy Managing Director, Pak-Kuwait Takaful Company Limited

Nov 20 - 26, 2006

Q1. Would you give us a general overview of First Takaful Insurance Company?

Pak-Kuwait Takaful Company Limited; the first ever Islamic Insurance Company in Pakistan has been incorporated as a joint venture of six financial institutions of which 50% shareholding is foreign comprising renowned Takaful companies from Malaysia, Sri Lanka and Kuwait and 50% local shareholding. The names of these organizations are:

1. Pak-Kuwait Investment Company (Private) Limited

2. Meezan Bank Limited

3. Saudi-Pak Industrial and Agricultural Investment Company (Pvt) Ltd.

4. TN Overseas Investment Pte. Ltd.(Representing Takaful Nasional of Malaysia)

5. Noor Financial Investment Company, Kuwait

6. Takaful Holdings Limited (Representing Amana Takaful of Sri Lanka)

A paid-up capital of PKR 80 million is required to set-up and start a Takaful company in Pakistan, whereas PKTCL started its operations with an overall paid-up capital of 250 million, which proves how strong its capital base is and how financially stable the organization is.

Q2. Would you enlighten us with the concept of "Takaful Insurance" and why it is termed the Islamic Insurance system?

The word 'Takaful' is derived from an Arabic root word 'Kafala' which means mutual guarantee, joint protection, to help, or to take care of one's needs, and is a Shariah-Compliant alternative to conventional Insurance.

Conventional Insurance is based on the principle of "Risk Transfer" where the policy holder transfers his/her risk to the Insurance Company and the Insurance Company is the sole owner of the fund and has the right to invest anywhere with an interest maximizing motive. In comparison, Takaful is based on the principle of "Tabarru - voluntary donation" where participants share the risks amongst themselves and investments are purely based on Shariah compliant tools. The concept of Takaful has developed starting from the days of Prophet Muhammad (PBUH) when people traveling in tribes used to pool money in a common fund and in case of loss to any member or as 'blood money', the loss was compensated upon.

Q3. How is it different from regular Insurance?

Unlike Conventional Insurance, Takaful is free from the following un-Islamic elements:

1. Riba

2. Maisir

3. Gharar

Therefore, Islamic Jurists have declared Insurance as permissible only if arranged on Takaful basis, as it does not contain the aforesaid un-Islamic elements.

Q4. How much progress had First Takaful Company made in Pakistan up till now?

Pak-Kuwait Takaful Company limited has already been launched and started its operations. The response from various sectors has been tremendous.

Q5. What initiatives have you undertaken to make this concept more popular with the common masses?

Pak-Kuwait Takaful Company limited has an extensive marketing campaign which not only aims to introduce our organization and products but also educates the common masses on Takaful as to how it is different from Conventional Insurance.

To date we have organized seminars on the "Concept & Mechanism" of Takaful for senior executives of Banks. In addition queries are being answered on a personal level and in meetings with prospective clients who have showed interest in Takaful. Meetings are also held with executives from other small and medium sized enterprises who show interest in Islamic way of insurance.

Q6. Tell us about your organizational setup and work environment?

Pak-Kuwait Takaful Company Limited is headed by Mr. Istaqbal Mehdi (Managing Director) an expert in Finance and having long and rich experience in the banking and finance. Mrs. N. K. Hasan is a highly qualified insurance executive having long enriched experience in the field. Presently she is Deputy Managing Director of PKTCL.

PKTCL encourages a friendly, professional and working environment where every individual is given liberty to take decisions in their own areas of working, which provides every day new learning experience that produces highly motivated professionals.

Q7. What are the reasons behind the late introduction of Takaful in Pakistan as compared to Middle Eastern countries?

The main reason for the late inception was due to the non-availability of a regulatory framework for Islamic insurance in Pakistan and also due to the late start of Islamic Banking. The first scheduled Islamic Bank (Meezan Bank) was incorporated in 2002.

Q8. How do you plan to face the challenge posed by your competitors also offering Takaful Insurance?

To date no other Takaful Company has launched its operations in Pakistan. Competitors don't pose a threat to any organization but healthy competition gives a chance to learn more behave professionally and do better. Considering the immense potential of Takaful business in Pakistan, there is still room for more Takaful companies to launch its operations.

Q9. How do you foresee the future of Takaful insurance system in Pakistan?

There is a great potential of Takaful in the world and also in Pakistan as majority of our population is Muslim and people are actually trying to switchover from Conventional mode of financing to Islamic finance. Just like the growth of Islamic Banking in Pakistan, Takaful will grow at a fast pace with more Takaful operators commencing business in coming months. However, I must say that we need more Re-Takaful companies to meet Retakaful needs of Takaful companies all over the world. At the moment there are only few Takaful companies due to which Takaful companies are facing capacity constraint.

There is lot of scope for Retakaful Companies in Pakistan.

Q10. What other projects have been launched by Pak-Kuwait Investment Company Limited?

Other than Pak-Kuwait Takaful Company Limited, Pak-Kuwait Investments has joint venture arrangements in Al-Meezan Investments, Meezan Bank and in the near future Pak-Kuwait Family Takaful will be launched.