Karachi:
The Takaful industry in Pakistan has traveled a long way since its beginning in 2006, when the Pakistan Bag and Securities Commission (SECP) promulgated Takaful rules. Azeem IQBAL Pirani, Operations Director and Executive Director of EFU Life, recalled the history of Takaful in the recent PAkGazette Podcast held in collaboration with EFU Hemayah Takaful. He mentioned that EFU was the first company incorporated as a general Takaful company with the aim of expanding insurance services to the general public according to their beliefs.
Pirani mentioned that at that time, ordinary citizens would not take advantage of any kind of insurance, whether general, life or health insurance, because people believed that insurance services were against Shariah. Those like him who joined to serve the Takaful industry aimed to expand services for common citizens in line with their beliefs, so that they could take advantage of without resistance or reluctance. This objective has been achieved to some extent, not as much as desired, but still, the proportion of Takaful services among general users has increased.
According to SECP last year, Takaful’s participation was around 12 percent of total sales in the insurance sector. The part is still modest for two reasons, one, that people still have doubts about their religious legitimacy, and second, people are not yet aware of these services. But SECP now has a particular interest in expanding the Takoful users base, with the aim of bringing its participation to 35 percent of 12 percent by 2028.
The host Aposel Azhar agreed that the lack of conscience is the main obstacle. He cites the insurance example in the self-financing sector, where he said he is high only because the SBP makes it mandatory. He said that in fact it is a double challenge to convince people to be financed with Islamic principles and then add to Islamic insurance, that is, Takaful.
Dr. Irum Saba, director of the Center for Excellence in Islamic Finance of Iba Karachi, explained the reasons behind the poor concentration of Islamic finance in Pakistan. He pointed out that our country has a large population of 250 million, but the government’s commitment and regulators are not so strong. She compared this with Malaysia, the country with a very large concentration of Islamic finances, maintaining that the government and regulators there are very committed, and consciousness is much higher than in Pakistan.
She said that in Malaysia, students, businessmen, companies and each institution is protected by Takaful. Compared to Pakistan, he said that state institutions in Malaysia are headed by people committed to Islamic finances, including their Ministry of Finance, Securities Commission and Central Bank. She advocates for that commitment, together with consciousness, is the key to the expansion of the late industry. In particular, he advocates such consciousness extended at the level of schools, universities and even peoples.
Dr. Irum also cited the examples of other neighboring countries, where he said that financial education is much more frequent than Pakistan. She cites her experience of seeing street vendors who have QR code machines for payments, which said it reflects the good financial insight of the least educated people. He emphasized the youngest generation through tools, techniques and ia.
When asked about the milestones, Efu Hemayah Takaful has achieved during his 10 years of history and his forward plan, Pirani said Efu Life was the first company that obtained the window license for its services. He mentioned that EFU not only launched a Takaful product, but also gave him a brand identity. Currently, Takaful contributes to 35 percent of the EFU Life business, reflecting its growth during the decade.
A strategy that worked particularly was to provide customers with the option of converting existing life insurance products in which they meet the Shariah. This was an incomparable offer that not only promoted the company’s business, but also helped expand the penetration of Takaful in Pakistan. EFU then moved to inclusive and digital options, which also helped expand the customer base. Thanks to the growing business, the company has distributed a surplus of 800 million rupees among its customers, which is now 1.4 million.
Answering a question about the steps taken by I was going to connect the academy with the industry, Dr. Irum explained that his center regularly performs training, participates in research and maintains discussions and debates about Islamic finances. He mentioned that specialized training programs to impart a solid understanding of Takaful were administered by expert trainers from national and international institutions.
He also declared that the center is investigating the Wakala-Waqf model in Takaful, which is applicable in Pakistan. She said the training is also offered to companies that seek services for their employees of Takaful operators. In another program, the Center offers training on Islamic Heritage Management and Planning, where students are educated on how to save and invest, and when it comes to investment, Takaful’s role also highlights.
