Exclusive interview with Mr. M. Vaqaruddin, Chief Executive Officer,
Pak-Qatar General Takaful Limited
By Nasir Mahmood
Mr. M. Vaqaruddin, Chief Executive Officer, Pak-Qatar General Takaful Limited joined the Company on 1st February 2007. A science graduate, MBA and ACII from the College of Insurance Institute, London. He is a Charter Insurer with 28 years of experience in the insurance industry. He was the last General Manager of Commercial Union Assurance Co. plc., before Commercial Union decided to close their operations in Pakistan. They transferred their business to New Jubilee Insurance Company Limited. Vaqaruddin then joined NJI as their Executive Vice President in the year 2003.
Nasir Mahmood: Takaful is a new name for domestic consumers. How it came into being in Pakistan and your Company started, would you like to highlight?
M. Vaqaruddin: Till year 2000 insurance sector had been governed by Insurance Act 1938. In August 2000 this Act was repealed and Insurance Ordinance 2000 was announced by government. In this Ordinance first time 'Takaful' was introduced and next five years were spent on making rules for Takaful. In 2005 Takaful Companies' Rules were announced. After that few groups from Middle East countries decided to form Takaful infrastructure in Pakistan and applied for this purpose. Our main sponsors M/s Qatar Group headed by Sheikh Ali Bin Abdullah Thani Al-Thani belonged to Royal family of Qatar and running various businesses there like; Qatar Islamic Insurance, Islamic Bank, Qatar National Bank and others. He decided to divert some capital from those institutions towards Pakistan and applied here in 2006. We took license after one year and in August 2007 our two companies were formed simultaneously in the name of Pak-Qatar General Takaful and the other as Pak-Qatar Family Takaful which is the alternative for life insurance sector. Since then we started business in Pakistan.
N.M: How many other countries in the world have introduced Takaful business and what was the success ratio?
M.V: At present more than 130 Takaful companies are doing business in 47 countries of the world and more interesting fact is that Takaful has become popular in USA, Canada, Australia, UK, and France etc. where Muslim and non-Muslims are equally attracted. In Malaysia 40 percent non-Muslims are doing business with Takaful companies. The popularity of Takaful business is now worldwide and current size of Takaful is 2.4 billion dollar and it is estimated that up to year 2012 this could be enhanced up to 7 to 8 billion dollar. World over combined assets of Takaful are 1.6 trillion dollars. Its annual growth is more than 17 percent and this growth is 35 percent more than the conventional insurance companies.
N.M: What is the difference between Takaful and the conventional insurance system?
M.V: The difference between Takaful and conventional insurance could be defined as; when you pay premium in conventional insurance you transfer the risk to insurance company and your losses are paid by the insurance company as per terms & conditions of that policy. In Takaful business risk is not transferred but shared by both the parties with solidarity. There is a pool where people/ participants deposit their money and they provide cover not only to themselves but to others too. And we manage that pool from where profit and losses are shared. This is basic difference between the two sectors.
N.M: What is the infrastructure of this system and how it operates?
M.V: Money collected in the said pool is invested strictly in Islamic securities. To monitor this process there is a Shariah Advisory Board comprising three Islamic scholars (Mufti). We have Mr. Taqi Osmani as chairman for General Takaful, while Mufti Ismatullah and Mufti Zubair Osmani are members of the Board. They visit regularly to our office for obligation of this duty. In addition to this we have also our internal Shariah advisors who are permanently coordinating and sitting in our office to make sure that each and every document of investment; agreement etc. in our business is strictly Shariah compliant. Sukuk Bonds, selected companies from stock market, Islamic Banks and their various products are the main focus of our investment activities. Though sometimes return ratio is less than the conventional system but we don't cross our limits.
N.M: How do you find general response from market so far?
M.V: We have just started and only one year old in this field. Most of the time was spent for creation of infrastructure, training our staff and installation of comprehensive computer hardware and software. But year 2009 is witnessing our full swing when we have fully prepared our workers and marketing team to explore business. In 2008 we had fixed initial business target of Rs100 million but as you know it was election year which triggered political turmoil and general unrest while last four months of the year saw international economic recession. But even then we earned a business of Rs86.5 million which was quite close to our target. During this year we want to make it four to five times higher than previous target. We don't see any hurdle to achieve this target provided political environment and the law and order situation improves within the country.
N.M: How many other Takaful companies are operating in the country and do you see the conventional insurance companies as competitor in local market?
M.V: Presently five Takaful companies are allowed in Pakistan by government; three are active in General Takaful and two involved in Family Takaful business. We are the only company which is dealing in both General Takaful as well as Family Takaful segments and we are using state of the art technology software imported from Malaysia which is very costly but it shows our full determination to provide best possible service to our clients.
Our Head Office is Karachi while branches are established in Lahore, Islamabad, Faisalabad and Peshawar. We have very good response from masses. People understand the concept and process of Takaful; it is Shariah compliant and attractive for the country where 97 percent population is Muslim. Out of 140 million populations every person is a possible client for our Family Takaful while in General Takaful corporate clientele is a major factor. We have tough competition against more than 30 conventional insurance companies but this is a challenge and we have to accept it. Our marketing team is fully determined to go to far flung areas just to convince people and motivate them for our products.
N.M: How many other products are introduced by Pak-Qatar Takaful in local market and what are the prospects for its promotion?
M.V: We have also introduced some individual products like Motor Takaful, Household Takaful, Travel Takaful, Hajj and Umra Takaful quite successfully marketable products. Our business is related and also growing with expansion of Islamic Banking in Pakistan. This is an easy and simple system which is understood by people very convincingly. Our main challenge is to have a maximum reach to the people and convey the message by creating awareness among them.
M. Vaqaruddin: Till year 2000 insurance sector had been governed by Insurance Act 1938. In August 2000 this Act was repealed and Insurance Ordinance 2000 was announced by government. In this Ordinance first time 'Takaful' was introduced and next five years were spent on making rules for Takaful. In 2005 Takaful Companies' Rules were announced. After that few groups from Middle East countries decided to form Takaful infrastructure in Pakistan and applied for this purpose. Our main sponsors M/s Qatar Group headed by Sheikh Ali Bin Abdullah Thani Al-Thani belonged to Royal family of Qatar and running various businesses there like; Qatar Islamic Insurance, Islamic Bank, Qatar National Bank and others. He decided to divert some capital from those institutions towards Pakistan and applied here in 2006. We took license after one year and in August 2007 our two companies were formed simultaneously in the name of Pak-Qatar General Takaful and the other as Pak-Qatar Family Takaful which is the alternative for life insurance sector. Since then we started business in Pakistan.
N.M: How many other countries in the world have introduced Takaful business and what was the success ratio?
M.V: At present more than 130 Takaful companies are doing business in 47 countries of the world and more interesting fact is that Takaful has become popular in USA, Canada, Australia, UK, and France etc. where Muslim and non-Muslims are equally attracted. In Malaysia 40 percent non-Muslims are doing business with Takaful companies. The popularity of Takaful business is now worldwide and current size of Takaful is 2.4 billion dollar and it is estimated that up to year 2012 this could be enhanced up to 7 to 8 billion dollar. World over combined assets of Takaful are 1.6 trillion dollars. Its annual growth is more than 17 percent and this growth is 35 percent more than the conventional insurance companies.
N.M: What is the difference between Takaful and the conventional insurance system?
M.V: The difference between Takaful and conventional insurance could be defined as; when you pay premium in conventional insurance you transfer the risk to insurance company and your losses are paid by the insurance company as per terms & conditions of that policy. In Takaful business risk is not transferred but shared by both the parties with solidarity. There is a pool where people/ participants deposit their money and they provide cover not only to themselves but to others too. And we manage that pool from where profit and losses are shared. This is basic difference between the two sectors.
N.M: What is the infrastructure of this system and how it operates?
M.V: Money collected in the said pool is invested strictly in Islamic securities. To monitor this process there is a Shariah Advisory Board comprising three Islamic scholars (Mufti). We have Mr. Taqi Osmani as chairman for General Takaful, while Mufti Ismatullah and Mufti Zubair Osmani are members of the Board. They visit regularly to our office for obligation of this duty. In addition to this we have also our internal Shariah advisors who are permanently coordinating and sitting in our office to make sure that each and every document of investment; agreement etc. in our business is strictly Shariah compliant. Sukuk Bonds, selected companies from stock market, Islamic Banks and their various products are the main focus of our investment activities. Though sometimes return ratio is less than the conventional system but we don't cross our limits.
N.M: How do you find general response from market so far?
M.V: We have just started and only one year old in this field. Most of the time was spent for creation of infrastructure, training our staff and installation of comprehensive computer hardware and software. But year 2009 is witnessing our full swing when we have fully prepared our workers and marketing team to explore business. In 2008 we had fixed initial business target of Rs100 million but as you know it was election year which triggered political turmoil and general unrest while last four months of the year saw international economic recession. But even then we earned a business of Rs86.5 million which was quite close to our target. During this year we want to make it four to five times higher than previous target. We don't see any hurdle to achieve this target provided political environment and the law and order situation improves within the country.
N.M: How many other Takaful companies are operating in the country and do you see the conventional insurance companies as competitor in local market?
M.V: Presently five Takaful companies are allowed in Pakistan by government; three are active in General Takaful and two involved in Family Takaful business. We are the only company which is dealing in both General Takaful as well as Family Takaful segments and we are using state of the art technology software imported from Malaysia which is very costly but it shows our full determination to provide best possible service to our clients.
Our Head Office is Karachi while branches are established in Lahore, Islamabad, Faisalabad and Peshawar. We have very good response from masses. People understand the concept and process of Takaful; it is Shariah compliant and attractive for the country where 97 percent population is Muslim. Out of 140 million populations every person is a possible client for our Family Takaful while in General Takaful corporate clientele is a major factor. We have tough competition against more than 30 conventional insurance companies but this is a challenge and we have to accept it. Our marketing team is fully determined to go to far flung areas just to convince people and motivate them for our products.
N.M: How many other products are introduced by Pak-Qatar Takaful in local market and what are the prospects for its promotion?
M.V: We have also introduced some individual products like Motor Takaful, Household Takaful, Travel Takaful, Hajj and Umra Takaful quite successfully marketable products. Our business is related and also growing with expansion of Islamic Banking in Pakistan. This is an easy and simple system which is understood by people very convincingly. Our main challenge is to have a maximum reach to the people and convey the message by creating awareness among them.
