PAK­ISTAN: SECP LAUNCHES NEW TAKA­FUL RULES

[ Source: Se­cu­ri­ties and Ex­change Com­mis­sion of Pak­istan Press Re­lease, 13 July 2012 ]

Insurance - - INDUSTRY UPDATES -

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.

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