Karachi:
The Takaful Industry in Pakistan has gone a long way since its creation in 2006, when the Securities and Exchange Commission of Pakistan (SECP) promulgated Takaful rules. Azeem Iqbal Pirani, director of operations and executive director at Efu Life, recalled the story of Takaful in the recent Podcast PK Press Club which was held in collaboration with Efu Hemayah Takaful. He mentioned that EFU was the first company constituted as Société Générale Takaful in order to extend insurance services to the general public in accordance with their beliefs.
Pirani said that at the time, ordinary citizens would not benefit from any kind of assurance, whether general, life or health insurance, because people thought that insurance services were on Sharia law. Those like him who joined it to serve it from the Takaful industry aimed to extend services to common citizens in accordance with their beliefs, so that they can take advantage of without any resistance or reluctance. This objective was achieved to a certain extent, not as much as desired, but always, the share of the Takaful services between general users has increased.
According to last year’s report by SECP, Takaful’s share was around 12% of the total sales sector sales. The share is always modest for two reasons, one, that people still have doubts about his religious legitimacy, and secondly, people are not yet aware of these services. But Secp now has a particular interest in extending the user base of Takaful, aimed at bringing its share to 35% by 12% by 2028.
Animator Adeel Azhar has agreed that a lack of awareness is the main stumbling block. He quotes the example of insurance in the self-finance sector, where he said that he was only raised because of the SBP, which makes him compulsory. He said that it was indeed a double challenge to convince people to take finance on Islamic principles, then to also add to Islamic insurance, that is to say Takaful.
Dr. Irum Saba, director of the Center of Excellence in Islamic Finance at IBA Karachi, explained the reasons for the poor concentration of Islamic finance in Pakistan. It noted that our country has a huge population of 250 million inhabitants, but the commitment of the government and regulators is not as strong. She compared this to Malaysia, the country with a very large concentration of Islamic financing, arguing that the government and the regulators there are very committed, and awareness is therefore much higher than in Pakistan.
She said that in Malaysia, students, entrepreneurs, businesses and each establishment is protected by Takaful. Compared to Pakistan, she said that state institutions in Malaysia are led by people who are engaged in Islamic finances, including their Ministry of Finance, the Securities Commission and the Central Bank. She recommends that such a commitment, associated with consciousness, is the key to the expansion of the Takaful industry. In particular, she advocates such consciousness to be distributed at schools, colleges and even villages.
Dr. Irum also cited the examples of other neighboring countries, where she said that financial literacy was much more widespread than Pakistan. She quotes her experience of seeing street hawkers having QR code machines for payments, which, according to her, reflects the good financial sense of otherwise less educated people. She insisted on the education of the young generation through tools, techniques and AI.
Asked about EFU Hemayah Takaful milestones reached during his 10 years of history and her plan, Pirani said that Efu’s life was the first company that obtained the window license for its services. He mentioned that the EFU had not only launched a Takaful product, but also gave it a brand identity. Currently, Takaful contributes 35% of EFU Life’s activities, which reflects its growth during the decade.
A strategy that has particularly worked has been to provide customers with the possibility of converting existing life insurance products into sharia compliant products. It was an unrivaled offer that not only stimulated business activities, but also helped to widen Takaful’s penetration in Pakistan. The EFU then passed inclusive and digital options, which also helped to extend the customers. Thanks to the growing company, the company has distributed an excess of 800 million rupees among its customers, which is now 1.4 million.
Responding to a question about the measures taken by IBA for connecting the university world to industry, Dr. Irum has developed that his Center regularly directs training, engages in research and holds discussions and debates on Islamic finance. She said that specialized training programs to transmit a solid understanding of Takaful have been administered by expert trainers from national and international institutions.
She also said that the center is doing research on the Takaful model of Wakala-Waqf, which is applicable in Pakistan. She said that training is also offered to companies looking for services for their employees with Takaful operators. In another program, the Center offers training on wealth management and planning, where students are informed of how to save and invest, and in terms of investment, the role of Takaful is also highlighted.
