Window Takaful business: Jubliee Life Insurance makes formal announcement
The country’s largest conventional life insurance company in the private sector formally announced on Wednesday it is setting up window Takaful business.
Total gross premiums of Jubilee Life amounted to over Rs10.5 billion at the end of the first six months of the current year, which makes it the largest private-sector conventional insurance company operating in Pakistan. Its total gross premiums at the end of June were 31.4% higher than the comparable figure recorded at the end of June 2013.
The establishment of the window family Takaful operation will be subject to approval of shareholders and the Securities and Exchange Commission of Pakistan (SECP), the company said.
Its board will call an extraordinary general meeting to obtain approval from its shareholders for necessary amendments in the memorandum and articles of association of the company, the notice said. It also resolved to increase the authorised capital to Rs2 billion.
The SECP replaced Takaful Rules 2005 with Takaful 2012 two years ago, which allowed conventional insurance companies to set up Islamic windows to conduct Shariah-compliant business.
However, existing players in the Islamic insurance industry – two in the life segment and three in the non-life segment – resisted the SECP’s move, resulting in a two-year-long legal battle. Their plea that allowing conventional insurance companies to sell Takaful products would distort the Islamic insurance market won them a stay on the implementation of Takaful Rules 2012 from the Sindh High Court.
Three months ago, however, conventional insurance companies received the permission to enter the Shariah-compliant segment when the stay order was finally lifted following an out-of-court settlement among conventional and Islamic insurance companies.
In addition to Jubilee Life Insurance, the second largest insurance company in the private sector has also expressed its intention to establish Islamic window operations recently. EFU Life Assurance collected total gross premiums amounting to Rs8.7 billion in January-June, up 33.9% from the same period of 2013.
With the current level of insurance penetration in Pakistan – measured at 0.9% of the gross domestic product (GDP) – the potential market for Takaful appears to be substantial.
Published in The Express Tribune, October 30th, 2014.