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PAKISTAN:
Takaful firms in Pakistan have reportedly decided to withdraw their
constitutional petition against the Securities and Exchange Commission of
Pakistan (SECP), 23 insurance companies and the federation of Pakistan
within this week, relating to the Takaful Rules 2012. Local industry
reports revealed that the Takaful companies involved opted for a still to
be confirmed, out of court settlement. This will allow conventional
insurers to run Shariah compliant insurance business through parallel
window operations.
Instituted in 2012, the petition sought to challenge the implementation
of the Takaful Rules 2012 on the grounds that the move would ‘distort’
the Islamic insurance industry. Several demands were raised pertaining
to: the separation of paid-up capital for the two lines of businesses to
avoid ‘mingling of funds’ making the entire exercise un-Islamic; for
conventional insurance companies launching Islamic windows to maintain a
distinct separation in their Islamic and conventional operations through
stand-alone, dedicated offices and staff for each line of business; and
the status of the Shariah board in the Islamic window operations of
conventional insurance companies to be of a supervisory nature as opposed
to an advisory nature.
According to industry sources, Pakistani Takaful operators have decided
to withdraw two claims: (1) the need for a separate subsidiary with its
own paid-up capital for a conventional insurance company to establish
Islamic window operations (which was nonetheless agreed by the SECP); (2)
the need for conventional insurance companies launching Islamic windows
to maintain a distinct separation in their Islamic and conventional
operations through stand-alone, dedicated offices and staff for each line
of business.
The finalization of the settlement is however subjected to the formal
consent of two conventional insurance companies including State Life
Insurance Corporation (SLIC). Some of the biggest players such as Jubilee
Life, Adamjee Life and SLIC are said to be eager to launch their Islamic
operations. Some of these companies have reportedly vowed to launch
Islamic window operations within three months of the resolution of the
legal dispute.
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