Beruflich Dokumente
Kultur Dokumente
What is covered
CONVENTIONAL INSURANCE
Indemnification against unforeseen financial
losses (not to profit from loss)
Commercial Risk Transfer
Law of Large numbers - Insurance company
pools risks/reinsures above capacity.
Recovers expenses for managing the pool
Investment return under life insurance
shared with PHs based on Actuarial
Valuation or otherwise.
Profit for the shareholders based on
Underwriting results and Investment income
Actuarial Services Division
OBJECTIONS TO
CONVENTIONAL
INS
Objections to Conventional Ins
Elements of:
Uncertainty Gharrar (nonexistence of goods, un-known
quantity, timing) in a commercial
risk transfer contract.
Interest Riba
CONVENTIONAL vs TAKAFUL
Issue
Conventional
Takaful
Organization
Principle
Profit for
shareholders/
Risk transfer
Form of
Relationship
Commercial
Exchange/Contrac
t of compensation
Cooperative, Shariah
contracts of Wakala or
Mudarabah with
contribution for mutual
assistance
Capital
Shareholders
Laws
Regulations
Ownership
Shareholders
Equity/debt-no
Investments
Actuarial Servicesrestrictions
Division
Sharia compliant
investments only / No
Sidat Hyder Morshed
interest
RE TAKAFUL
Retakaful
solutions
evolving
although
not
enough
capacity
available.
Best Re (Tunisia), Asean Re (Labuan)
and Tokyo Marine are providing
retakaful based on Mudaraba model.
Shariah scholars and SECP have
objections to Mudaraba model. Need
to look for Wakala based Retakaful
solutions as a preferred route.
Lloyds syndicate is setting up a
Retakaful
solution
for
General
Takaful.
Actuarial Services Division
RE TAKAFUL
Takaful Re launched in Dubai by ARIG with $125 m
capital. Recently rated BBB by S&P becoming the 1 st
Retakaful operator with a rating and Wakala based model.
Swiss Re recently launched Wakala based Family
Retakaful Fund.
Hannover Re is working on Retakaful solutions.
Munich Re has also incorporated its Retakaful subsidiary
in Malaysia.
Doctrine of Necessity may no longer be justified
hopefully leading to Takaful being backed by RETAKAFUL
rather than Reinsurance.
Government/ SECP needs to encourage setting up of
Retakaful pools.
Possibly within NICL / PRCL for General Retakaful
State Life for Family Retakaful
Market Potential
Pakistans insurance
density and insurance
penetration rates low.
Reasons Lack of
awareness and religious
concerns.
Takaful can help push
the penetration rates up.
GENERAL INSURANCE
Year
AverageEquity
Weighted(%)
EFU
AIC
NJI
Shaheen
Askari
2005
58
56
63
57
39
28
2004
33
60
27
30
11
23
2003
32
33
29
41
21
16
2002
21
17
21
25
18
13
LIFE INSURANCE
Year
AverageEquity
Weighted(%)
EFU
NJI
ALICO
METRO
2005
26
43
15
15
2004
27
47
21
2003
26
40
33
13
2002
14
17
-4
21
Islamic Banking
Dec
02
Dec
03
Dec
04
Dec
05
Mar
06
June
06
10
23
37
39
48
10
11
21
33
34
39
Takaful Operators,
banks and Capital
market players
continuously focus
on product building
to offer more
attractive products
that fulfill the
differentiated needs
of the customers.
BANCATAKAFUL
A mechanism for distribution of takaful products through banks.
Advantages for banks:
Additional fee income from existing customers received upfront.
Additional product offering
Increase customer retention by offering long term plans
Simple examples are:
Motor Takaful policy with Car Ijarah of Islamic Bank
Family Takaful cover with Housing or other financing facility.
Depositors protection
Credit card protection
More complex products include:
Savings products
Education products
Retirement products
Protection products
Actuarial Services Division
Recap
Protection against unforeseen financial losses is a
concern for many. Religious prohibition stops.
Takaful Offers a huge potential market by filling the
gap which remains untapped at present.
Competitive Pricing of Takaful products would remain
a key factor along with quality service.
Bancatakaful could fast track efficient distribution and
better customer value.
Adherence to Shariah principles in operational
practices would be the long term driver for success.
Actuarial Services Division
THANK YOU
Abdul Rahim Abdul Wahab, FSA
Director & Actuary
Actuarial Services Division
abdul.rahim@sidathyder.com.pk
Sidat Hyder Morshed Associates (Pvt) Ltd
Islamic Finance & Investment Symposium 6 - 7 Dec 2006,
Karachi