Exclusive interview with: Mr. M. Vaqaruddin Chief Executive Officer Pak­Qatar General Takaful Limited By Nasir Mahmood, dated May 20, 2009 Mr. M. Vaqaruddin is the Director and founding Chief Executive Officer of Pak­Qatar General Takaful Limited, a company specializing in General Takaful products in Pakistan. 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. Prior to joining Pak­Qatar General Takaful, he was the 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 was taken on board by NJI as their Executive Vice President in the year 2003. Pakistan Observer: Takaful is a new name for domestic consumers. Would you like to highlight its advent in Pakistan and subsequently how your company came into being as a result? M. Vaqaruddin: Till year 2000 the insurance sector had been regulated by Insurance Act 1938. In August 2000 this Act was repealed and Insurance Ordinance 2000 was promulgated by the government. In this Ordinance, for the first time, ‘Takaful’ was introduced and the next five years were spent on making the rules for Takaful. In 2005, Takaful Rules were made public. After that groups from the Middle East along with Pakistani investors decided to form Takaful companies in Pakistan and started applying to the government for licenses. Our main sponsor is, H.E Sheikh Ali Bin Abdullah Thani Al­Thani, member of the Royal family of the State of Qatar. He is one of the founders and major share holder in Qatar International Bank, Qatar Islamic Bank, Qatar Islamic Insurance Company, Qatar Real Estate Company, Islamic Bank of Britain and European Islamic Investment Bank decided to divert some capital from these institutions and his own investment towards Pakistan and applied here for the setting­up of Family and General Takaful Companies in 2006. We got the license in August 2007 for the two companies which were incorporated, simultaneously, by the names of Pak­Qatar General Takaful and Pak­Qatar Family Takaful. Since then we are in business in Pakistan. Total investment in both these companies have been above Rs.850 million. In General operation 90% of the investment has come from Qatar; 10% investment by a Pakistani businessman viz Fawad Yousuf Securities (Pvt) Limited while in Family the 100% investment has come from Qatar. PO: 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 takaful business in 47 countries of the world and more interesting fact is that Takaful has been successfully introduced in USA,
Canada, Australia, UK, and France etc. where Muslim and non­Muslims are being equally attracted towards this transparent concept and process. In Malaysia 40 percent non­Muslims are doing business with Takaful companies. The popularity of Takaful business is now worldwide and current size of Takaful is US$ 2.4 billion and it is estimated that up to year 2012 this will be up to US$ 7 to 8 billion. World over combined assets of Takaful are US$ 1.6 trillion. Its annual growth is more than 17 percent and this growth is 35 percent more than the conventional insurance companies. PO: What is the difference between Takaful and the conventional insurance system? M.V: The main difference between Takaful and conventional insurance is that in conventional insurance you transfer your risk to the insurance company while in takaful the risk is not transferred; it remains with you and is shared among yourself and other participants in a pool. This is an exhibition of solidarity and brotherhood; the teachings of Islam. The money collected in the pool is invested in Islamic securities in order to avoid the element of Riba (Interest). The company simply manages that pool. PO: 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 Supervisory Board comprising of three eminent Islamic scholars (Muftis). We have Hazrat Maulana Muhammad Taqi Usmani as Chairman of the board for General Takaful, while Mufti Ismatullah and Mufti Zubair Usmani are members of the Board. They visit our office regularly to oversee our operations. In addition to this we also have an Internal Shariah Coordinator who is permanently coordinating between the company and the Shariah Advisors to make sure that each and every document, agreements and investments are in accordance with the teachings of Shariah. Sukuk Bonds, selected companies from stock market, Islamic Banks and their various products are the main focus of our investment activities. We are backed by renowned Re Takaful Companies from Malaysia, Bahrain and Dubai. PO: How do you find the general response from market so far? M.V: We have just started and are only about 2 years old in this field. Most of our initial period was spent for putting in place the infrastructure, training our staff and installation of comprehensive computer hardware and business 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 did a business of Rs.86.5 million which was quite close to our target. For the year 2009 we have a target five times as compared to this. We don’t see any problem in achieving this target provided political environment and the law and order situation within the country improves.
PO: How many other Takaful companies are operating in the country and do you see the conventional insurance companies as competitors in local market? M.V: Presently five Takaful companies are working in Pakistan three are active in General Takaful and two involved in Family Takaful business. Pak­Qatar is the only group which has come up with both General Takaful as well as Family Takaful companies 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 participants. Our Head Office is in Karachi while branches are situated in Lahore, Islamabad, Faisalabad and Peshawar. We have a 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 population 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. PO: How many products are introduced by Pak­Qatar Takaful in local market and what are the prospects for its promotion? M.V: Our individual product portfolio includes Motor Takaful, Household Takaful, Travel Takaful, Hajj & Umrah Takaful and for corporations we have Fire Takaful, Marine Takaful, Motor Takaful, Engineering & Miscellaneous Takaful. They are all quite successfully marketable products. Our business is related to and goes hand in hand with the growth 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. End.