TAKAFUL THE ISLAMIC WAY OF INSURANCE

An interview with Mr. Imtiaz Bhatti, Deputy Managing Director, Pak-Kuwait Takaful Company Limited

June 25 - July 01, 2007

MR. BHATTI, TELL US ABOUT YOUR EXPERIENCE AND ACADEMIC BACKGROUND?

I am currently serving as the Deputy Managing Director of Pak-Kuwait Takaful Company Limited. Prior to this I worked as the Director Finance of New Hampshire Insurance Pakistan, a member company of the American International Group (AIG). My professional experience is spread over 20 years in Operations, Finance and Accounts. Earlier to my above assignments, I also worked for prestigious organizations like Aga Khan University Hospital and Pakistan Services Limited (Owners and operators of Pearl Continental Hotels) at progressive senior positions.

I hold a Master degree in Business Administration with majors in Marketing & Finance. I am also a Fellow of the Pakistan Institute of Public Finance Accountants and Associate of the Institute of Chartered Secretaries, Pakistan.

WHAT IS PAK KUWAIT TAKAFUL COMPANY LIMITED?

Pak-Kuwait Takaful Company Limited is the first Shariah compliant Takaful Company in Pakistan. PKTCL is committed to provide halal and absolutely Riba-Free insurance first time in Pakistan.

Pak-Kuwait Takaful Company Limited (PKTCL) is a multinational joint venture partnership between Pakistan, Kuwait, Malaysia, Saudi Arabia and Sri Lanka. PKTCL started its operations with an initial paid up capital of Rs. 250 million and an authorized capital of Rs. 500 million. Along with the financial strength and backing of our equity partners as well as expertise in Takaful, PKTCL is well poised and providing its services in an environment of trust and reliability.

PKTCL is led by a seasoned professional Mr. Istaqbal Mehdi as the Managing Director/CEO with a team of highly qualified and dedicated professionals.

WHAT DO YOU MEAN BY TAKAFUL?

Takaful is a Shariah compliant alternative to conventional insurance. The word 'Takaful' is derived from the Arabic word 'Kafala' meaning "to guarantee", to help or to take care of someone's needs. Takaful emerged from an ancient practice on the Arabian peninsula of mutual cooperation and assistance among members of a tribe.

Thus, a Takaful system comprises a group of individuals who contribute collectively to a common fund in order to share a loss or damage that may befall any member of the group.

HOW IS TAKAFUL DIFFERENT FROM CONVENTIONAL INSURANCE?

One of the major differences of Takaful and Conventional Insurance is that the participants share the risk mutually with each other rather than transferring risk to the insurance company. The Takaful operator acts simply as an agent/trustee on behalf of the fund, working for the Fund's benefit and profitability. Surplus (if any) accruing from Takaful operations is attributable to Participants Takaful Fund (PTF) and not Takaful Operator. The underlying purpose is not a commercial transaction with a profit-maximizing motive; rather it is for mutual assistance in the larger interest of the community's well-being.

AS THE PIONEER OF ISLAMIC INSURANCE IN PAKISTAN, HOW MUCH PROGRESS HAVE YOU MADE SO FAR?

In December 2005, Pak Kuwait Takaful Company Limited started its operations from scratch since there was no prior setup which could accommodate the system of Takaful in Pakistan. By the grace of all mighty Allah, we developed the entire Takaful system through a dedicated team of professionals and implemented it. We had the technical assistance from the Takaful operators of Malaysia and Sri Lanka behind us. Now, we are the largest and fastest growing Takaful operator in Pakistan. We have the best human resources and are proud of the fact that we have, without a doubt, the best client services on offer.

HOW SUCCESSFUL HAVE YOU BEEN IN CREATING AWARENESS ABOUT TAKAFUL IN THE GENERAL PUBLIC?

Pak Kuwait Takaful Company Limited has been running full fledged marketing campaign with the ultimate objective of promoting the cause of Takaful to the masses in Pakistan, and we have been successful so far, we have used every medium available to us to get the message of our cause to the general public. We have noticed a growing trend of conventional insurance clients converting to Takaful, this is mainly credited to a general shift in the Pakistan economic system to Shariah compliance.

AS COMPARED TO THE REST OF THE MIDDLE EAST, TAKAFUL WAS INTRODUCED LATE IN PAKISTAN, WHY?

The core reason behind the delayed introduction of Takaful in Pakistan was the lack of a regulatory framework. Seeing this requirement, Pak-Kuwait Takaful Company assisted the SECP in developing a framework, and in late 2005 the SECP announced the 'Takaful Rules 2005' which paved the way for all Takaful companies in Pakistan. Upon completion of this mission PKTCL began its operations as a dedicated Takaful company in Pakistan.

WHAT IS THE PRODUCT LINE BEING OFFERED BY PAK KUWAIT TAKAFUL COMPANY?

Pak-Kuwait Takaful Company Limited is offering a complete range of general insurance products, we have all kinds of coverages under the heads of Motor, Marine, Fire, Engineering and Miscellaneous. All these products are offered at competitive terms under Shariah compliance.

ARE YOU OFFERING ANY SPECIALIZED/UNIQUE PRODUCT?

Pak Kuwait Takaful Company Limited, under the supervision of its Shariah Board has launched an Umrah & Hajj Travel Takaful Policy. This is a round the clock personal accident cover to protect you and your family against losses including death, injury and disablement. The family option in this policy covers a family of five with, up to 3 children under the age of 18. This policy provides compensation during Umrah & Hajj for emergency medical evacuation, repatriation of mortal remains, loss of baggage and loss of passport.

IN YOUR OPINION WHAT IS THE FUTURE OF TAKAFUL?

As proven by the performance of Takaful companies in Malaysia and the Middle East, where the growth of Takaful has been tremendous, Takaful has immense potential for the future. In a predominantly Muslim country like Pakistan where the public is steadily moving toward Shariah compliant products and services, Takaful has immense potential for growth. We have already experienced exponential growth as a Takaful operator where the concept is not as known as it should be. With the passage of time, we are confident that Takaful will become a major entity in our economic system. The outlook for Takaful in the business environment prevalent in Pakistan is extremely positive for new companies willing to do business here.