The government whereas has also allowed Takaful windows to the conventional insurance firms, the pioneers of Islamic insurance feel uncomfortable with the official decision saying the conventional insurers were looking for “shortcuts” through their “unethical” entry into the business.
To this effect, Pakistan Today conducted an interview of Pak-Qatar Family and General Takaful. Senior Manager, Mr Syed Adnan Hasan (PQFGT).
About the post-Takaful window scenario, Hasan said the scenario seems no less than the one where someone is allowed to join a race with just few steps from the finishing line.
It even resembles with when a player is given a chance in the national team for reasons of his relation with one of the members of selection committee. Many such examples can be quoted to describe this “unethical” entry of Takaful windows but consider the above two to be sufficient.
Asked if he buys the view that the move would make the industry more competitive, Hasan said it is fair competition that is fruitful for the economy, but not one which the people are talking about.
The insurance companies, he said, are using their existing corporate structure and branch network for Takaful windows that would actually crush the existing Takaful operators.
With there being no barrier to entry, the prospective new entrants into the industry in the form of Takaful windows would run away with the show, making use of the low cost of entry.
It would just need them to accommodate the Takaful staff in their already built offices and allowing some of their budget for related training. Here comes for you the new Takaful operator in a minute or two. “Is this what we call fair competition,” he questioned.
Elaborating on his statement related to “unethical” entry of Takaful windows, Hasan said though the above examples looked adequate. Let’s make it simpler for those who might feel uneasy with the word unethical that has been rightly used.
It’s just like student “A” making efforts since the start of the term to achieve best grades and student “B” being a failure throughout, passing with flying colors in the final term. Readers might call “B” to have got serious during the final days resulting in improved results, but it is not the case. His parents are simply influential.
Put the existing Takaful operators under the label “A” and the prospective Takaful window operators as “B”. How can one justify an unethical entry of those under “B” against the years of struggle by those under “A”? Provide a level playing field and let’s see who rules.
On a question that how he sees the country’s predominantly Muslim population responding to the development, Hasan put up a counter question to all Muslim readers: “Will you be willing to refer/discuss your religious matters with a religious scholar of some other belief/religion who also knows something about Islam”?
Your answer would undoubtedly be no even if that person knows 100 percent Islam.
It is your satisfaction which is important and in case of Takaful products, it can certainly be achieved with your direction towards well established Takaful operators, namely the experts, operating under the supervision of dedicated Shariah Advisory Board, not those with two bags in hands, one full of non-Shariah complaint products and the other one with what they call would be Shariah–compliant.
What business would these companies be committed to? How would one measure their commitment towards the cause of promoting Takaful? Their commitment would simply be directed towards products/business which seems profitable irrespective of it being complaint or non-complaint.
Commenting on Pakistan’s being second nation in world to have allowed Takaful windows, the PQFGT manager said the media in various news articles was proudly reporting the country’s said status after Indonesia. But, he warned, the concerned authors should note that being second only for an incorrect belief is not a good thing.
Following examples set by nations adds value but the rational should be logical, in the best interest of your economy Hasan explained.
Following this course, the concerned media quarters would have to publish another one stating Pakistan to be the second nation after Indonesia, the regulator asking Takaful window operators to turn into full-fledged Takaful entities along with minimum paid-up capital requirement.
Hasan recalled an article stating about the new insurance law asking the Takaful window operators to turn into full-fledged Takaful entities. “The law is yet to be passed and the regulator is hopeful that it would be tabled in the Parliament by the end of the year,” he said.
Kindly, he said, also note the subject of the article referred that talks about switching Takaful in Indonesia to higher gear by asking windows to change the status. Consider in this context the news rolled by SECP Takaful Rules 2012, the Takaful windows if allowed would let everyone one comment: “Takaful in Pakistan started at top gear but the driver went asleep as they got on the right track”.
This would now result in a level-playing field in Indonesia’s Takaful industry with Takaful window operators being asked to set up Takaful entities with minimum capital requirements. “This is what we want in Pakistan to allow fair competition and witness who rules this sector in Pakistan,” he wondered. Drew to his apparent biasness towards the envisaged prosperity of the countrymen who would be benefiting the expanded Takaful windows available, Hasan again referred to one of the articles contributed which he said stated that: “The new rule brings new jobs”.
Adding that please note that opening up a window can never create more jobs than setting up a new entity. With new windows being opened, the cost of common departments would be shared out and no related vacancies would be available. Setting up new entities would require a start from scratch, needing each department to be set up, therefore more jobs waiting to welcome the unemployed. Not only will the jobs be available through local investment but the foreign investment would play a major role.
The performance of existing Takaful operators in a short span of time has attracted many foreign investors but the only thing which makes them reluctant is the issuance of orders allowing the conventional insurers to operate Takaful windows. Simply imagine the prosperity it would bring to Pakistan with foreign investment flowing in, all it needs is a logical think tank.
In his final words, the Takaful manager said being not at all in a mood to win an argument his remarks were simply to witness a prosperous Pakistan. “You might ponder as to how a correction in one industry would result in prosperity. What if I would have been thinking the same way, this single industry might have been overlooked, left to injustice,” he said.
The first hearing of the case in respect of the petition filed against the new rule by SECP was scheduled for August 16. There have been comments about very few chances for the existing Takaful operators to resist against the giants in the industry.
“Let me add another correction before we depart, those been called giants might be the ones in their own industry viz. conventional insurance, the giant in Takaful industry is yet to be determined and the time would tell,” Hasan said.
Finally, he said, let’s put the stance together, the voice of all existing Takaful operators, to ensure a level-playing field. For conventional insurers to enjoy a Takaful coaster ride must set up full-fledged Takaful entities as subsidiaries with minimum paid-up capital requirement to be decided by the SECP and whatever other requirements which were needed to be satisfied by those who gave birth to this industry in Pakistan because shortcuts are not allowed.
I rest this case in the court of competent jury and plea for justice.
