PAKISTAN’S JUBILEE PLANS ISLAMIC INSURANCE BUSINESS

Karachi,  17 Dhulhijja 1435/11 October 2014 (MINA) – Karachi-based Jubilee General Insurance Co will seek shareholder approval to offer Islamic insurance (takaful), the latest firm to enter the sector after conventional firms were allowed to offer sharia-compliant products earlier this year.

Jubilee, Pakistan’s third largest private sector insurer, will seek approval in an extraordinary general meeting on Nov. 7 to allow it to provide takaful and retakaful products both locally and overseas, the insurer said in a stock exchange filing.

Other firms entering the market include United Insurance Company of Pakistan and EFU Group, Pakistan’s largest insurer, which plans takaful windows for both its life and general businesses, according to Samaa.tv reports monitored by Mi’raj Islamic News Agency (MINA), Saturday.

Conventional insurers are bigger in size and have operated for longer, whereas takaful companies are on average five to six years old, but regulators are keen to encourage sharia compliant products which can have greater consumer appeal.

The regulator expects at least half of Pakistan’s 50 conventional insurers will eventually offer takaful products, with as many as 25 firms entering the sector in the year ahead.

Takaful is seen as a bellwether of consumer appetite for Islamic finance products. It is based on the concept of mutuality: The takaful company oversees a pool of funds contributed by policyholders from which claims are paid.

Pakistan introduced new takaful rules in 2012, allowing the use of takaful windows, which enables insurers to offer sharia-compliant and conventional products side by side, which prompted a legal challenge by the country’s five takaful firms.

The dispute was cleared in May after an agreement that requires insurers to allocate 50 million rupees (487,092) to their window operations, compared to no such requirement in the original rules.(T/P3/R01)

Mi’raj Islamic News Agency (MINA)