Research Analyst
Dec 22 - 28, 2008

Takaful Pakistan Limited aims to lead the contemporary insurance/Takaful market ensuring that its operations are Riba-free and are in line with the cardinal Islamic principles. Takaful Pakistan also offers a unique option for return of surplus to its clients whereby any balance remaining in its Waqf-Fund shall be returned to the Participants in proportion to their original contributed amount. The company is managed by a team of qualified and experienced professionals and supervised by a distinguished Shariah Advisory Board of international repute; Takaful Pakistan has the capacity to underwrite risks in all avenues of General Insurance namely, Property (Fire & Engineering), Marine, Motor, Liabilities, bonds & guarantees, etc. In addition, the Company has the expertise and arrangements with overseas Re-Takaful operators enabling it to offer comprehensive coverage for large infra-structure projects, specialized risks and umbrella/blanket covers specifically tailored for Islamic banking operations as well as for large corporate groups.

Takaful Pakistan has been assigned 'A-' rating with stable outlook by JCR-VIS. It is currently the only rated Takaful Company in the country and one of the few amongst contemporary insurance companies that have been assigned A ratings. The Company currently operates with a network of branches in seven major cities in the country.


Emirates global Islamic bank limited (EGIBL) has entered into an agreement with takaful Pakistan to provide twenty four hours worldwide personal accidental death and permanent disability takaful coverage to all retail depositors. All Savings and Term Deposit Account holders will be covered for twice the amount of average deposit in case of Accidental Death and as per the compensation schedule in case of Permanent Disability. No current account will be covered. As an emerging venture, EGIBL selected Takaful Pakistan Limited, continuously striving for viable Islamic alternatives to the conventional insurance. The company is servicing in a best possible way to protect its valued clients against risks. This unique feature of Takaful coverage has no minimum deposit requirement or a minimum retention period.


Pakistan is among the top 10 most populous nations in the world. Despite international recession in the overall economy of the world which has also affected Pakistan's financial sector, the trend of takaful companies is going upwards in Pakistan as it makes very fertile market for Takaful, albeit one with some interesting challenges. Takaful is the latest "wave" in financial protection. Pakistan saw its first Takaful operator, in the General side, start in 2006. Since then, another two operators in General and one in Family have entered the picture. Takaful is not just another tool for risk mitigation and financial protection. Rather, it is a system which works as a source of good for those that use it and the community at large. Tools like these are critical for developing nations, especially those seeing rapid economic growth. Increasing personal debt, the widening divide between the have and have-nots, and other such issues regularly plague those in rapidly growing developing nations. Another aspect of the financial market that is not yet effectively utilizing these tools is the consumer banking sector. This sector with out doubt has grown and the possibilities it holds for financial protection. This is an area that the present insurance companies are working on moving into but thus far, they have only touched the surface. However, there are significant challenges for Takaful in Pakistan.


This is the most important area which we all need to discuss as Pakistanis are known to be conservative spenders. Given the low GDP per capita, spending on something additional with uncertain benefits is not easy. Or perhaps it is because Pakistanis do not know the benefits of using these tools and that little effort has been made to educate the masses about this aspect of the financial industry. It would be safe to assume that the answer consists of a combination of the above elements. In order to deal with the issues, significant investments will be required to reach out to the public and educate them.


No doubt Takaful is an ideal system of Islamic insurance based on the principle of Ta'awun (mutual assistance) and Tabarru (voluntary contribution), where the risk is shared collectively by the group. It is operated on the basis of shared responsibility, brotherhood, solidarity and mutual cooperation or assistance, which provides for mutual financial security and assistance to safeguard participants against a defined risk. Unlike the insurance companies, the Takaful operators' primary source of revenue is the Wakalah fee. This has relatively little room to maneuver and so they will need to work very hard to ensure that their operations are not just effective but also lean. Thus we see that the challenges are not small by any measure but they can definitely be overcome.

If the present and future of Pakistan Takaful is not just looking at going after those individuals who are "Religion-Centric", they need to look at positioning their offerings in a slightly different manner. There key selling proposition would have to be that Takaful products should be based on the following variables: need-based, appropriate pricing and immaculate customer service. An additional feature would be that the products are Shariah compliant and so, customers need not compromise on their beliefs to be able to get the best in financial protection. Effectively dealing with the challenges present and properly positioning their offering will allow Pakistan Takaful to achieve levels that even existing insurance companies have thus far been unable to reach.