Life insurance penetration restricted to 0.3 percent
Current life insurance penetration in Pakistan has been restricted to 0.3 percent, leaving a huge untapped market for Takaful companies. Official sources said here on Thursday, "the entry of conventional insurers into Takaful business is widely expected to boost consumer contribution in Takaful sectors.
Copyright Business Recorder, 2014
EFU, Jubilee and United Insurance companies have entered into Takaful business. Talking to Business Recorder, Ayaz Hussain Gad, an insurance analyst, said the insurance penetration will increase from 0.9 percent of country's Gross Domestic Product (GDP) after the approval to launch Takaful, Islamic alternative to conventional insurance products, to both general and life insurance companies, which remains the third lowest in Asia.
Moreover, he said, "Insurance penetration is all depend on commercial interest as a Muslim country and Takaful-based totally on Shariah Law, people likely to take interest in this type." On the contrary, Pak-Qatar Takaful Group, Pakistan's Pioneer Takaful industry, considers window Takaful operation by conventional insurers as an initiative to create stiff competition in Takaful market.
Syed Adnan Hasan, Head of Marketing Pak-Qatar Takaful Group said, "We believe that it would be a healthy competition in the market. We are pioneer of Islamic Shariah Compliant insurance alternative and gained profit. Pak-Qatar has not considered authorisation as a threat to their business". He further added that the total business of Pak-Qatar General and Family Takaful has reached to Rs 5.4 billion. The biggest and most important challenge for new Takaful player is trained human resources. They have to focus in training of their sales person which would take six to seven months. Because in the case of Islamic Financial products the skills set increase as it requires grounding in principle of Shariah.
He further said that another challenge would be marketing of Takaful products as there is a stark difference between marketing of Islamic and conventional financial products is that in the case of conventional products, consumers are not interested in knowing back-end functionality. However, many Islamic financial institution's clients want to know how things work-showing interest in the detail of legal contracts involved in financial products.