It is about Takaful Pakistan

1. BUSINESS
PROCESS
REENGINEERING
REPORT
TAKAFUL PAKISTAN
Submitted to: Mr. Sohail Majeed
Team Members
Hira Anwar Khan
MadihaSarfaraz
Syed Hasan Nemat

2. ACKNOWLEDGEMENT
‘In the Name of Allah, the most Beneficent, the most Merciful’
Takaful Pakistan Limited was incorporated in June, 2006 with its registered head office
in Karachi. With an authorized capital of Rs. 300 million. It is currently the only rated
Takaful Company in the country and one of the few amongst contemporary insurance
companies that have been assigned ‘A’ ratings. This report is purely based on interview
conducted at Takaful Pakistan Limited Head Office and information gathered about the
Work Processesthey practice.
We take this opportunity to express our profound gratitude and deep regards to our
guide Mr. SohailMajeedfor his exemplary guidance, monitoring and constant
encouragement throughout the course of this project. The blessing, help and guidance
given by him time to time have given us the strength to look beyond our limits and get
the best out of us.
We also take this opportunity to express a deep sense of gratitude to Mr. Akbar Ali
Qureshi, Head of Fire, Property, Re-Takaful, Takaful Pakistan Ltd, for his cordial
support, valuable information and guidance, which helped us in completing this task
through various stages.
Lastly, we thank almighty, our parents and friends for their constant encouragement
without which this assignment would not have been possible.
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3. CONTENTS LISTING
TABLE OF CONTENTS
ACKNOWLEDGEMENT ........................................................................................................................................................... 1
CONTENTS LISTING ............................................................................................................................................................... 2
TABLE OF CONTENTS ....................................................................................................................................................... 2
LIST OF FIGURES ............................................................................................................................................................... 2
EXECUTIVE SUMMARY ......................................................................................................................................................... 3
INTRODUCTION .................................................................................................................................................................... 4
PROCESS ANALYSIS ............................................................................................................................................................... 5
PROBLEM DEFINITION.......................................................................................................................................................... 6
PROPOSED SOLUTION ........................................................................................................................................................... 7
CONCLUSION........................................................................................................................................................................ 10
APPENDICES ....................................................................................................................................................................... 11
QUESTIONNAIRE ............................................................................................................................................................ 11
VISUALS OF VISIT............................................................................................... Error! Bookmark not defined.
LIST OF FIGURES
Figure 1 The Process of Policy issuance ................................................................................................. 5
Figure 2 The Process of Claim Handling ............................................................................................... 6
Figure 3 Complete Process from Intimation to Claim........................................................................... 6
Figure 4 Authoritative Structure for Quotation and Policy Making ................................................... 7
Figure 5 Proposed Overall Process ...................................................................................................... 8
Figure 6 Fareeq-e-Takaful Members ..................................................................................................... 9
Figure 7 Process Versions ...................................................................................................................... 9
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4. EXECUTIVE SUMMARY
Business Process Reengineering claims the most successful organization change process
but application has been successful in some cases, others have suffered losses. BPR still
provoke managers to think about their process and bring about a change in their
organization.
This report acknowledges BPR as a change process and its usage in a service sector
organization Takaful Pakistan Limited which is an Islamic insurance company. Takaful
comes from the Arabic root word ‘Kafala’, meaning "guarantee". Takaful therefore is the
practice whereby individuals in the community jointly guarantee themselves against
loss or damage.
Takaful Pakistan Limited is a traditional organization, where the level of fragmentation
in high. The departments are made on the basis of Product Portfolio. Hiring is done on
the basis of expertise.
The problem in the process of Takaful Pakistan Limited is the fragmented work tasks
performed by different departments acting like silos which makes them department
centric. Also the authoritative structure is very complex; making the process time
consuming and complex. The distribution of underwriting department into four
different departments has not helped the company. Finally there is a requirement for
division of applicants on the basis of priority.
The proposed solution is based on the measures used in Business Process
Reengineering and the methods studied during the course of BPR sessions. The
proposed solution shall change Takaful Pakistan from a traditional organization to a
Reengineered Organization whose prime focus remains the customer.
In the proposed solution, the concept of department is a forgotten theme. The concept
of a team ‘Fareeq-e-Takaful’ is introduced, the members of the team shall work in
unison. The authoritative structure which was complex in the existing system is now
simple. The team is the owner of the process having the authority to complete the
transaction without any other signatory intervention. Lastly, prioritizing work in the
form of versions to easily process the applications
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5. INTRODUCTION
Business Process Reengineering has been the talk of the corporations since its
inception. The biggest reason being its impact on the organization. Successful
Implementation of BPR has given huge gains but at the same time Failures has incurred
greater losses. Both ways BPR has made managers think about their processes.
Business Process Reengineering is simply theanalysis of the process and rethinking of
the complete process to bring about a radical change in business process which in
exchange creates dramatic improvements in overall performance of the corporation.
From the very start our businesses cut the processes into fragments so as to increase
the speed of processing. In a way fragmentation has made work easier and faster, but
when looking from a broader view it has added much more work done in terms of
administration, control. Also the advantage of greater profit by quantifying production
has minimized due to administrative expenses. BPR has emerged as the answer to all
such problems.
This report analyzes the processes of a Takaful Company and identifies measures for
bring about the change through BPR.Takaful comes from the Arabic root word ‘Kafala’,
meaning "guarantee". Takaful therefore is the practice whereby individuals in the
community jointly guarantee themselves against loss or damage. The company in our
consideration is Takaful Pakistan Limited.
Takaful Pakistan Limited marked its inception in June, 2006. Capital valuation of Rs. 300
million. Company shares are owned by reputable financial institutions like Arif Habib
Investments etc.Lead by an experienced team of trained professionals and headed by an
esteem Shariah Board, Takaful Pakistan Limited provides risk coverage in all facets of
General insurance namely Property (Fire & Engineering), Marine, Motor, Liabilities, etc.
Currently company is operating from Lahore, Peshawar, Karachi (head office).
Takaful Pakistan Limited is a traditional organization; its processes are highly
fragmented, with work divided into piece meal tasks and different departments have
authority over different tasks not the complete process. Ever product is dealt by a
different department, making it difficult to control the processes
Our proposed process shall join these piecemeal tasks and make it a single process
where customer would become the main priority. We propose a team known as ‘Fareeqe-Takaful’ whom shall handle the complete process from intimation to claim. As there
are different types of customers (individuals, banks, and corporate groups) we suggest
that different versions of processes should be constructed so as to decrease the
complexity and lead time.
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6. PROCESS ANALYSIS
Takaful Pakistan Limited is a service company and its purpose is coverage of Risks and
therefore its prime focus is their customers. Customers are the reason for existence but
still companies are not customer centric; same is the case with Takaful Pakistan Limited.
The processes are tailored as piece meal tasks and divided into different departments
for completing the process. The tasks are handled by different people in different
departments; therefore it takes quite some time to complete a transaction. To
understand the process at Takaful Pakistan Limited see figures
Intimation
Information
gathered
Quotation
made and sent
Inspection
Policy Issued
Figure 1The Process of Policy issuance
The process starts with customer intimation; it can be a phone call, email by the
customer himself or a request from an agent (made on behalf of the customers).
Intimation is forwarded to the underwriting department; a representative here asks for
the complete information of the valuable to cover, processed through email.
As soon as the information is received in terms of valuation, location etc.; a quotation is
made by another member of the underwriting department. Quotation is a document
containing the coverage list; terms and conditions, clauses relating to the coverage.
First a draft of the quotation is made which is checked and signed by the Head of
Underwriting Department and then sent back for printing final quotation and sending it
to Customer. This process is completed in a single working day after the complete
information has been gathered.
Quotation is sent to customers by two means; riders, courier. Riders are mail man hired
by Takaful Pakistan. They work in shifts. Now the process is dependent upon the
customer, whenever he replies on behalf of the quotation; the process is railed again.
The quotation terms are subject to change in 15-30 days.
Now the Underwriting Department sends an inspector to the site where customer
wants coverage on. Inspection is done to check the given situation matches real
situation or not. Inspector fills a form and clicks photographs of the site for
documentation. This documentation is then checked and signed by the Head,
Underwriting for further process. Inspection is at least completed in a day; depending
upon the size of site.
The underwriting department now prepares the policy and the contribution schedule
using the in house MIS. Firstly a draft of the policy is prepared which is checked by the
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7. signatory and then the final policy is made wrapped in a jacket with the complete
contribution schedule. As soon as the policy is delivered the contribution deposits
starts. The first deposit is made within 3 months. Policy takes an hour to complete.
As Policy issuance process part is explained now moving to Claim Handling; another
piecemeal task handled by the Benefit department. This process starts with a claim from
the customer made to the underwriting department which then forwards it to benefit
department for further process.
Loss Claim by
Customer
Information
Gathering
Survey of the
Site
Report of
Survey made &
checked
Required
Documents
Submission
Check Issued
Figure 2The Process of Claim Handling
Benefit department first gathers the information about losses from the customers then
appoints an independent surveyor (industry practice) who surveys the losses incurred
on site. The surveyor also prepares a complete report of the losses with photographs
and forensic evidence. In the report he also mentions the set of documents required to
trigger the claim process. This report is checked and signed by the Head of Benefit
Department and then the list of documents is communicated with the customer.As the
customers submits the set of documents, the process of claim issuance starts and ends
up in issuance of loss amount check by the Accounting Department. The time frame for
the Claim process is 10-45 days.
Underwriting department is subdivided into four department made in accordance with
the product; Namely Fire & Property Underwriting, Marine Underwriting, Health
Underwriting and Motor & Accident Underwriting. This increases the fragmentation of
the process.
Agents/ Marketing Department
Attract
Customer
Administration
Movement of Coordination Information
Documents
Gathered
Underwriting
Quotation
made
Inspection
Benefit
Policy made
Survey
Report
Make decision
of Claim
Figure 3Complete Process from Intimation to Claim
Figure 3 describes the complete process in the form of tasks and the departments
interlinked. As far as the Administration Department is concerned, the complete process
is directed through this department, also documents (quotation, policy) is moved by
admin.
PROBLEM DEFINITION
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8. As the process suggests Takaful Pakistan Limited is a traditional organization, the level
of fragmentation in high. The departments are made on the basis of Product Portfolio.
Hiring is done on the basis of expertise. People working in Fire and Property
Underwriting department are not trained to handle the tasks of Marine Underwriting
Department. This shows that having the same process does not work for the employees
but the product portfolio is the center of interest for them.
This section introduces the different problem sets identified by us. Firstly, when talking
about the policy issuance process; this takes no more than 2.5 days to complete but
according to the information gathered it can take up to 3 months to complete the
process. After the visit we asked one of its customers about the lead time for policy
issuance; the client mentioned that for his company it took 7 months to complete the
process for a simple fire policy.
Secondly, the authoritative structure is quite complex, employees aren’t given authority
over the task they do, each task when completed has to be checked by the department
head. This causes increase in lead time and produces inefficient results. Even when the
quotation is returned from the customer, CEO himself checks the quotations and then
forwards it to relevant underwriting department through admin. So the authority is one
major concern for Takaful Pakistan Limited. As most traditional organizations
employees and decision making are considered two different things, this adds more non
value added work, also increases the lead time.
Lastly, the lead time varies from industry to industry and individual to individual; as we
were told that for banks, lead time is less than a day, as for financing, banks requires
coverage and need quotation in 15 minutes because coverage is the last avenue for their
business process, so employees work against the priority for banking sector. This
increases the queue time for all other applications.
Draft Prepared
Submitted to
Head of Department
If Approved
Figure 4 Authoritative Structure for Quotation and Policy Making
PROPOSED SOLUTION
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Final Copy is made

9. The problem in the process of Takaful Pakistan Limited is the fragmented work tasks
performed by different departments acting like silos which makes them department
centric not customer centric. Also the authoritative structure is very complex; making
the process time consuming and complex.The distribution of underwriting department
into four different departments has not helped the company. Finally there is a
requirement for division of applicants on the basis of priority.
We are proposing this solution, keeping in mind the problems identified. The proposed
solution is based on the measures used in Business Process Reengineering and the
methods studied during the course of BPR sessions. The proposed solution shall change
Takaful Pakistan from a traditional organization to a Reengineered Organization whose
prime focus remains the customer.
Underwriting
Department
Benefit Department
If claimed
Information
Gathered
Quotation Made,
Sent
Inspection
Policy Made,
Survey
Tasks Converged to Process
Sent
Document
Requirement
Decision on
Claim
Process From Intimation to Claim
Process Owners
Fareeq-e-Takaful
Figure5 Proposed Overall Process
The above figure shows the complete transformation of the tasks in the process
(Intimation-Claim) to a complete process handled by a team known as the Fareeq-eTakaful. As the task set of process is broad and can’t be handled by a single employee
therefore a team is made. Few of the tasks (Inspection, Survey) can’t be done by any
team members it requires qualified and trained professional. This is why a Case Team
was better than a case manager.
Fareeq-e-Takaful constitutes of four individuals whose work tasks would be
Information Gathering (policy, claim), Underwriting, Inspection, Survey, Claim Handling.
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10. Fareeq-e-Takaful
Information
Officer
Underwriting
Officer
Inspector
Independent
Surveyor
Claim Officer
Figure 6Fareeq-e-Takaful Members
Now the concept of department is a forgotten theme. These individuals shall work in
unison given space near to each other so that they can easily communicate and share
information without using any communication means. The only person indirectly linked
with the process is the surveyor as the industry demand is an independent surveyor.
The authoritative structure which was complex in the existing system is now simple.
The team is the owner of the process having the authority to complete the transaction
with any other signatory intervention up to a certain level decided by the management.
In cases where considerations are required team can consult with an expert within the
organization or a consultant for the purpose.
Lastly, now the point arises of prioritizing the applications, this measure could be
solved by introducing different versions of the process based upon the lead time
requirement for completing the application and the process Complexity. Process
metrics should be decided on these two measures and at least 3 versions are proposed.
V1 : Faster Service, Repetitve
Applications
Banks and Financial Institutions
Decide as per condition
Corporate Organizations
V2: Medium CSL, Medium
Complexity
Individuals
Slow Service, Complex
Figure 7Process Versions
The above diagram illustrates the versions and the conditions when to provoke the
version, it also shows the customer categorization which makes it easier to understand
the version and need.
This is how the complete process could be reengineered keeping in mind the problem
which we thought can be used in the case of Takaful Pakistan Limited.
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11. CONCLUSION
These days’ organizations around the globe feel the need for change as the customers
are not the same as in the past eras. Customers have evolved and so is the need of
organizations. This pressure is immense in the service sector as customers have choices
available.
Takaful Pakistan Limited is a service sector organization following the processes of a
traditional organization. Fragmentation of work is the real problem for the organization
which is common in Traditional Organizations. This report projects a future process
structure for the organizations which shall help in achieving greater CSL and increased
satisfaction of employees. Future Research is required for other processes which this
report has not covered.
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12. APPENDICES
QUESTIONNAIRE
What is meant by Takaful?
How is it different from Insurance?
Give us an overview about Takaful Pakistan Limited Products?
Can you give a detailed overview of the complete application to claim process?
How many people are involved in the process?
Which departments are interlinked with which process?
Who is the authorized signatory of each process?
Who handles the process when signing authority is absent?
How much time is required from intimation to policy?
How much time is required by Benefit department for handling claim?
Cycle time required for each process?
Most clients are from which industry?
What is the shortest lead time to issue a policy?
How much time is set for quotation approval?
What SOP’s are followed regarding process time frame?
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