Tariq Saeed Chaudhry

Group Manager Corp Sales

Pak-Qatar Family Takaful Limited
02 November ,2010
Lahore, Pakistan

Agenda
About Pak-Qatar Takaful Group
Life is Full of Risks
Conventional Insurance vs. Takaful
The Practical Side of Takaful

Pak-Qatar Takaful Group

KEY FACTS: Pak-Qatar Takaful

Group
First Takaful Group in Pakistan,
The Group is sponsored by leading
financial institutions from the State
of Qatar
Paid-up Capital:
Family Takaful : Rs. 533 million
General Takaful:
Rs. 307 million

Total:
Rs. 840 million

Major Achievements
Received an A minus (having Stable Outlook)
rating from JCR-VIS Credit Co. while still in second year of
operations
Have Re-Takaful arrangements with some of the
best Re-Takaful global companies in the world

14 cities having 25 branches

Have a trained sales force of 900+ strength in the

Are present in

market in less than 3 years or operations

Have on board 300+ corporate clients in less

than 3 years of operations
Have declared 15% Surplus for Individual customers
for the financial year ended 31 December 2009, in
second year of operation

Awards & Recognition

the Best Family
Takaful Operator in Pakistan by 1st
National Achiever Award (2009)

WON:

Declared

NOMINATED:

Operator

as

for

Best

Takaful

in the world by CPI Financial,

UAE (2009)
WON for Best Use of Technology
in Islamic Finance Industry by CPI Financial, UAE
(2009)
RANKED: Top 4 in

Strategy

by
London, UK (2009)
WON:
2009

Best Marketing
World

Takaful

Brands of the Year

Summit,
Award

Life is full of Risks

Motor

Fire

Travel

Marine

Health

Machinery
Life

Risk Mitigation
Since the beginning, people have tried to
protect themselves from risks and
resulting losses
What is Risk?
Risk is the potential danger that threatens to
harm or destroy an object, an event or a
person

Risk Mitigation Tools

Available Risk Mitigation Tools?
Avoid Risk Mitigation:
A concept generally misunderstood as Tawwakul.
Tawakkaul by definition however is employment of
all Halal available means/resources and entrusting
Allah SWT with the outcome

Self-Insurance
or
setting
aside
contingency money for the rainy day
Conventional Insurance:
A commercially viable system but inherently flawed
with Shariah defined ills such as Riba, Gharar, and
Qimar/Maysir

Takaful:
A Halal and
insurance

Ethical

alternate to

conventional

Risk Mitigation in Islam

Is the concept of risk mitigation permissible in Islam?

This very concept is not only lawful/permissible in Islam but is in fact
encouraged

Islamic history is replete with examples featuring

activities involving risk mitigation:
Hadith:
Tie the Camel and then Submit to the Will of Allah

Dhaman Khatr al-Tareeq:

A person would undertake another persons risks without any
consideration/fee in return

Dhaman Al-dark:
A person would influence a sale by promising to compensate for
the loss if the subject-matter proved faulty

Aqila:
A risk sharing mechanism in which community members pooled
their share of Diyat (blood money)

The underlying theme in all these examples is the

concept of brotherhood and mutual solidarity

TAKAFUL

CONVENTIONAL
INSURANCE

Conventional Insurance vs
Takaful

The Conventional Insurance

Process
The customer pays premiums in exchange for
claim (at the time of risk actualization) from the
Insurer

CLAIMS (Upon Risk Actualization)

PREMIUMS (MONEY)

Shariahs Stance on Conventional

Insurance

concept of
Insurance?

practice of
Insurance?

Shariah has no objections as to the concept or

objectives of insurance ; it only has
reservations with the way it is being
practiced

Shariahs Stance on Conventional

Insurance
Point # 1
It
is
a
sales-purchase
contract. In Shariah terms it
is called Aqd Muawaza
Point # 2
Premiums belong to the
company
Point # 3
Insurance company pays the
claims from its own pockets
Point # 4
Premiums are invested in all
kinds of investment avenues,
including
Riba-based

Riba, Gharar, Qimar/Maysir

Because this is sales-purchase contract i.e. Aqd
Muawaza, this kind of risk mitigation involves:

RIBA

GHARAR

QIMAR/MAYSIR

DIRECT RIBA

The difference between the premiums

paid by the policyholder and the
claims
received
IN-DIRECT
RIBA
Premiums are invested in Riba-based
investment avenues

Riba, Gharar, Qimar/Maysir

Because this is sales-purchase contract i.e. Aqd
Muawaza, this kind of risk mitigation involves:

RIBA

GHARAR

QIMAR/MAYSIR

In Aqd Muawaza, Shariah does not allow

Gharar & Qimar/Maysir.

GHARAR

Gharar is present because the

Subject Matter of the contract does
not exist, is not specifiable, and the
time of delivery is uncertain

Riba, Gharar, Qimar/Maysir

Because this is sales-purchase contract i.e. Aqd
Muawaza, this kind of risk mitigation involves:

RIBA

GHARAR

QIMAR/MAYSIR

In Aqd Muawaza, Shariah does not allow Gharar

& Qimar/Maysir.

QIMAR/
MAYSIR

Total loss of premiums paid by the

participant in case the risk doesnt
actualize

TAKAFUL

Definition of Takaful
The word Takaful originates from Arabic
language.
Its root word is kafala which means to
guarantee.
Through inflection it changed to takafala
which means to help each other or to
jointly guarantee each other.

The Concept of Takaful

Takaful is a community-pooling system in which
participants contribute their savings into the
common fund to help those who need it most in
times of financial difficulty
It is based on the concept of brotherhood and
mutual solidarity.
EXAMPLES: The concept of Takaful is
manifested in the system of Baitul Maal, the
cooperative societies and the joint-family set ups
etc

Takaful Process
Takaful Operator creates the Waqf Fund or the
Taburru Fund
Participants
contribute
their
premiums/contributions on the basis of Taburru
into this Waqf Fund
The Waqf Fund pays the claims
Surplus
Claims
Takaful
Operator

WAQF FUND

Contributions

Key Points on Takaful Process

Point # 1
Contributions are paid on the basis of
Taburru. In Shariah such a contract is
called Aqd Taburru
Point # 2
Contributions are credited to the Waqf
Fund; Operator acts as Wakeel
Point # 3
The Waqf Fund pays the claims
Point # 4
Contributions are invested only in
Shariah
Compliant
investment
avenues
Point # 5
An
independent
Shariah
Board
supervises business activities for
Shariah compliance

WAQF

Recap Fundamental Differences

between Conventional Insurance &
Takaful
AQD TABURRU

AQD MUAWAZA

CONTRIBUTIONS CREDIT
TABURRU FUND

PREMIUMS BELONG
TO COMPANY
COMPANY PAYS
THE CLAIM

RIBA-BASED
PROFITS

WAQF

TABURRU FUND PAYS

THE CLAIM

HALAL INVESTMENT
PROFITS

The Practical Side of Takaful

Takaful Bridges the Vital

Gap
Public
Needs
Public
Beliefs
Public
Awarene
ss

Gap!!
!

Present
Financial
Protections
Tools

Applied Takaful:
from Investors Perspective

13
4

+ 36

# Takaful Operators in
2009

Approx.

15

>1
8

Window Operators Irani Operators Re-Takaful Operators

Global Market Size :

Current Global Trends suggest US$ 8.9 billion in gross
contributions by 2010 (E&Y, WTC 2010)
Takaful is growing 35% faster than conventional insurance
worldwide (Dr. Ahmed Al Janahi, Managing Director NOOR Takaful, WTC
2009)

KEY FACT: 60% of customers of Takaful in Malaysia are

non-Muslims.

Applied Takaful:
from Customers
Perspective

Takaful resonates with the beliefs and values system

of people from different cultures:
Shariah
Complian
t

Ethical

Transpar
ent &
FullDisclosur
e

Shariah
&
Socially
Responsi
ble
Investme
nts

Surplus
Sharing

Family Takaful
Model

How can Takaful Help

you?
- Corporate Takaful Products
- Individual Takaful Products

Family Takaful Products,

Corporate
Group Healthcare
The Group Health
Takaful Plan is
designed to cater
to your
employees wellbeing.
It covers their
hospitalization
due to any reason,
major medical
expenses,
maternity/childbirt
h as well as dayto-day medical
expenses.

Family Takaful Products,

Corporate
Group Family
Takaful
The Group Family
Takaful is a risk
coverage Plan
that provides
protection to
participants
employees in the
event of Death
due to any cause
(Natural,
sickness,
accident)

Family Takaful Products,

Corporate
Retirement
Income
This Plan enables
the employer
to provide its
employees
with retirement
benefits, in
either lump
sum payment
or as periodic
income

Family Takaful Products,

Individual
Savings &
Protection
Why borrow loans
and incur debts?
A more dignified
way of fulfilling
your needs is
through
savings.
Maximize your
savings through
Takaful

Family Takaful Products,

Individual
Education Plan
A Takaful plan
which ensures
the continuity
of your childs
education even
when you are
not around
OR
cannot afford
the tuition fees

Family Takaful Products,

Individual
Mortgage Takaful
In an event of the
participants
sudden death or
disability, the
Takaful Operator
will settle the
outstanding
mortgage
finances thus
ensuring the
security of
home for loved
ones

Family Takaful Products,

Individual
Retirement
Income
A Plan that
provides
regular income
upon your
retirement

Share n Care Savings Takaful

The NEEDS
Share n
Care

accumul
ates
small
savings
amount
and
grows it
into a
large
fund to
fulfill all
your

Salient Features of Share n

Care

Share n Care Savings Takaful

ABC Education Takaful

ABC
Takaful

ensures
the
continuit
y your
childs
educatio
n even
when
you are
not
around
or

Difficulties in Ensuring Continuity

of Childrens Education
Affordabilit
y of Higher
Education
1.TUITION
FEES
2.FAMILY SIZE
Who should
acquire education
and to what
extent? Sons
given more
preference

Untimely
Death of
IncomeGenerator
Children
become
breadwinners
of the family

Loans Are
Short-term
solution
Loans incur
debts and
debts further
create
problems

The Escalating Cost of

Education
An average of 5 children / family in Pakistan
To afford quality education of every child is becoming
increasing difficult
Cost of tuition fees and textbooks increasing
exponentially
IBA
BBA = Rs. 640,000/ LUMS BBA = Rs. 960,000/MBA
= Rs. 900,000/ KU
BBA = Rs. 158,000/ SZABIST
BBA = Rs. 502,720/ CBM
EMBA = Rs. 400,000/-

A Simple Illustration of ABC Education

Takaful

Jazaak Allah Khairan for your

patience
For Feedback:
Email: tariq.chaudhry@pakqatar.com.pk
familytakaful@pakqatar.com.pk
URL: www.pakqatar.com.pk