1. TAKAFUL
Rehan Uddin Khan
ID:4552

2. It is an Arabic word which means “Guaranteeing each other”.
Takaful comes from the Arabic root-word „kafala‟
TA‟AWUN (mutual assistance) and TABARRU‟ (Gift, Give
away, donation)
Operationally, takaful refers to participants mutually
contributing to a common fund with the purpose of having
mutual indemnity in the case of peril or loss.

3. Differences between Takaful & Insurance
What is Insurance?
A tool for Risk Mitigation and Financial Protection
A tool to enable people to save (Life Insurance)
Key differences between Takaful and Insurance are:
Risk Sharing Vs. Risk Transfer
Wakeel Vs. Guarantor
Ameen Vs. Owner
Different type of Contract

4. Pakistan – Overall
 Population: 6th amongst global nations. 166 m.
 Population in 2015: Still 6th . 193 m.
 Urbanization: Presently at 33%
 Urbanization by 2015: 39%
 GDP Per Capita: $753

5. Pakistan – Insurance Market
Penetration of Insurance
 Pakistan: 0.7% of GDP
 India: more than 3% of GDP
 Iran: approx. 1% of GDP
 Family & General Companies
 Few Innovative Products.
 Very recent change in this area

6.  Resistance to Insurance, and its benefits, due to different
reasons.
 Non-Shariah compliant elements.
 Government regulations untested.
 Human resources for the sector.
 Education and Awareness.
 Marketing & Sales issues.
 Operational Issues.

7.  Strong growth in the Islamic financial sector provides Takaful
with a natural market.
 Massive untapped market in Pakistan for risk mitigation tools.
 Lack of govt. social safety net.
 Negligible provision of reliable health care by the govt.
 Ethical and Shariah compliant model for risk mitigation and financial
protection.
 Ethical and Shariah compliant model for risk mitigation and financial
protection

8. Mudaraba Model
Wakala Model
Wakala -Waqf Model
Basic Principle regarding Takaful
Policyholders cooperate among themselves for their common good.
Every policyholder pays his subscription to help those who need assistance.
Losses are divided and liabilities spread according to the community pooling system.
Uncertainty is eliminated concerning subscription and compensation.
It does not derive advantage at the cost of others.

9. Preamble
Duration
Cancellation Clause
Takaful operator's fee
Investment management share
Surplus distribution

10. Takaful is not only here to stay; it‟s going to GROW!
It‟s ethical and Shariah compliant nature allows Takaful
to overcome the inherent problems with Insurance.
Pakistani market has challenges but also has a lot of
opportunities. There are a lot of opportunities for
Takaful operators to make healthy profits in Pakistan.
Although Insurance coverage is not the norm in
Pakistan we need to work to make Takaful something
everybody uses