SECP opens doors for conventional operators to set up Takaful windows

25 days to go Thursday 21st August 2014 SECP opens doors for conventional operators to set up Takaful windows Daily Cover PAKISTAN: The Securities and Exchange Commission of Pakistan (SECP) has heeded calls from conventional insurance operators requesting to set up Takaful windows. In a notification issued by the SECP yesterday, the regulatory body granted permission to United Insurance Company (UIC), a conventional operator, to launch window Takaful operations in respect of General Takaful products. Mian Shahid, the chairman of United International Group of which UIC is a member company, expressed that the decision of the government would help broaden the insurance base as public concern on insurance being compatible with Shariah was one of the challenges barring growth of the sector. Following official authorization, UIC would venture into untapped areas and increase insurance penetration which was less than 1% of the country’s GDP. According to Mian, the Takaful funds in UIC would be segregated and separate accounts would be maintained under the window Takaful operations. The SECP had in May issued a ruling requiring conventional insurers interested in establishing a Takaful window to deposit a minimum of PKR50 million (US$489,956) in a scheduled bank. A statement of the statutory funds to be established by the operator and participant Takaful fund policies need to be submitted in addition to a 10-year business plan for Family Takaful and a three-year plan for non-Life Takaful operators. Conventional Pakistani insurers that could potentially jump on the bandwagon following in UIC’s footsteps include: EFU General Insurance, Jubilee Life Insurance and State Life Insurance Corporation. The regulatory body is expecting as many as half of the 44 non-Takaful companies in Pakistan to eventually apply for a license. 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