News
Monday, January 23, 2012
Sharia-compliant risk coverage to benefit millions: PEW* PEW president says Islamic insurance will ensure stability
Staff Report
ISLAMABAD: The Pakistan Economy Watch (PEW) on Sunday said that Securiteis and Exchange Commission of Pakistan’s (SECP) move to push Sharia-compliant risk coverage in Pakistan would benefit millions.
The move may triple insurance density and penetration in which Pakistan ranks lowest in the region, said PEW. Islamic insurance can benefit those who do not subscribe to the conventional insurance, forbidden by the Sharia law, said PEW President Dr Murtaza Mughal, adding that Takaful, the halal risk mitigation had been growing 15 percent annually. Unlike conventional insurers, who charge money to cover the risks, Takaful spreads the risks and rewards among all participants, he informed. Mughal said that approval of Takaful Rules 2012, plan to set up a central Sharia board and allowing conventional insurers to initiate Takaful operations were the steps which were long due.
He said that share of Takaful was one percent of the global insurance market while it enjoyed two percent of the market in Pakistan, which was to get a boost as the top ten companies having 93 percent of the market share in the country were preparing to exploit the potential. Mughal said that there were seven life, 35 non-life, three Takaful, two family Takaful and one re-insurance company operating in Pakistan while Malaysia, which presented the best model, had 12 Takaful and four Re-Takaful operators.
SECP should supervise and ensure cost-effective and competitive financial protection to the people, push companies to focus small cities and towns and initiate efforts for flow of information aimed at community development, Mughal said, adding that this might help rural communities in Pakistan who suffered losses worth billions because of inadequate coverage during floods and other disasters.
He said that insurance penetration in Taiwan stood at 18.4 percent, Switzerland 17.7 percent and India 5.1 percent, while Luxembourg, Ireland, Denmark and France topped the list of average spending on insurance. Increased focus on Islamic insurance can save the insurance industry from distress in case of any global financial crisis, he noted. “Muslims are 20 percent of the World’s population but Takaful has one percent share that underscores the need for immediate legislation and ambitious penetration,” Mughal said.
According to Ernst & Young, global Takaful contributions which were $9.15 billion in 2010 and $12 billion in 2011, are expected to touch $25 billion by 2015. Contributions per Takaful operator in Malaysia are at $115.8 million, GCC at $63.5 million, subcontinent at $16 million, Africa at $11.8 million and around $4.3 million in Turkey, Syria, Lebanon, Palestine, and Egypt.
Courtesy www.dailytimes.com.pk