PAKISTAN: SECP LAUNCHES NEW TAKAFUL RULES
[ Source: Securities and Exchange Commission of Pakistan Press Release, 13 July 2012 ]
The existing Takaful Rules in Pakistan were issued in 2005. During the course of business activity and implementation of these Rules, a number of practical issues were highlighted by the stakeholders. As a result of these concerns, the Securities and Exchange Commission of Pakistan (SECP) constituted a Committee in 2007 with a mandate to review the existing Takaful Rules and recommend possible enhancements. The Committee laid a special focus on the areas including the coherence with accounting provisions of the SEC (Insurance) Rules 2002, guidelines for allowing conventional insurance companies to do takaful business through specialised “window” operations, prescribing of percentages in respect of various modes of the shariah compliant investments for the purpose of determining solvency, among others. After detailed deliberations, the Committee finalised and submitted a draft of its recommendations based on the new Takaful Rules. The SECP reviewed the draft rules and after seeking shariah scholars and legal expert opinions on the draft, the new Takaful Rules were approved by the SEC Policy Board. The Chairman of SECP, Muhammad Ali officially announced the promulgation of the new Takaful Rules 2012. The Chairman further said that SECP is committed to partner key stakeholders for the development of takaful to extend the insurance services and awareness to people around Pakistan. The SECP’s unconditional support for such initiatives is another example of this strong commitment and represents the path of progress SECP want to take
together over the upcoming times.
The Commissioner (Insurance), Mohammed Asif Arif said presently, three General Takaful (non-life insurance) and two Family Takaful (life insurance) companies are operating in Pakistan. It is expected that after the promulgation of new Takaful Rules, the number of takaful service providers in Pakistan will increase substantially as the conventional insurance companies will also be allowed to offer takaful products. Empirical experience has shown that since existing conventional companies have the edge in terms of better reinsurance and retakaful accessibility with years of expertise, along with the customers having brand loyalty, such companies may serve the larger portion of the market with their larger sales force and vast branch network.