Shariah-compliant: Country’s insurance market set for takaful boost

Pakistan’s insurance sector is set for a boost in competition after the industry regulator allowed conventional firms to offer takaful earlier this year. The regulator, the Securities and Exchange Commission of Pakistan (SECP), has now granted two takaful licenses and has up to 10 applications currently being finalised. 20 to 25 new takaful window operators are expected in the market within one year. The regulator sees greater opportunity in life insurance although commercial lines of business could also find appeal in rural markets where the demand for products like crop, agricultural, livestock insurance is increasing. Such an increase in activity could face challenges, in particular a lack of experienced staff as well as the need for Islamic re-insurance products to help manage excess risk.