Leveraging BancaTakaful
as a
Key Growth Channel
Challenges and Opportunities
Rohail Alikhan, DCEO
Pak-Qatar General Takaful
Pak-Qatar General Takaful
• Part of PQT Group offering both Life & General Takaful Cover
• Combined paid up capital of Rs. 840 million
• Sponsors are Qatari Islamic Banks, Islamic Insurance Companies, &
Investment Mgmt Firms
• Just our top three sponsor banks alone have a combined shareholder
equity of over QR 14 billion (USD 3.8 billion) and total assets under
management of over QR 95 billion (USD 26.12 billion), making us the
strongest General insurance company in Pakistan
• A-Rated Shariah-compliant reinsurance companies
• Registered and supervised by the Securities & Exchange Commission of
Pakistan (SECP)
• An independent Shariah Supervisory Board, chaired by Mufti Muhammad
Taqi Usmani, certifies all Takaful products and business operations for
Shari’ah compliance
• State-of-the-art business technology from Malaysia and in SAP ERP
solutions complemented by specialized human resources
Takaful is a Growing Opportunity
• Muslim countries represent 23% of emerging market GDP
– 11% of Insurance premiums (USD45bn) written in these
countries
• 2004-2007 Takaful growth 25%-30% p.a. vs. 10% for Conventional
 Contributions have increased from USD 1.7B in 2004 to USD 3.4B
in 2007
 Largest Global markets are Saudi Arabia and Malaysia
• Insurance penetration in Muslim countries is 1.3% vs. 2.8% in
emerging markets.
• In 2007, potential market for Takaful was estimated at USD35-45bn
Financial Crisis is an Opportunity to
Establish BancaTakaful as a Force
• The financial crisis has severely impacted financial
institutions and the ensuing recession has severely affected
growth forecasts in all sectors and regions
• Takaful operators that successfully manage their business
risks and think “out of the box” will be well-placed to take
advantage of emerging opportunities
• BancaTakaful is one of these opportunities.
• BancaTakaful is defined as the distribution of Takaful
products by Banks (Normally Islamic Banks)
Advantages for the Bank
•The Bank sees BancaTakaful as a way of creating a
new revenue flow and its extensive branch network is
efficiently used.
•Diversifies its business activities
•Covers all customers’ needs – whether financial or
protection related.
The distribution costs are marginal since it is the Bank’s
existing employees who sell the products.
Advantages for the Takaful Company
•Extends its client base due to Bank’s extensive network.
•Provides access to clients who were otherwise difficult to
reach
•Varies the distribution channels.
•The Takaful Company often benefits from the wellestablished brand image and service reliability that people
attribute to Banks.
•Lower cost compared to the cost of the traditional sales
representatives.
Advantages for the Customers
•The client enjoys greater access to all financial services
from the Bank including protection – “One Stop Shop”
or “Islamic Financial Supermarket”
•The client benefits from cheaper Takaful products than
through traditional channels.
•Contribution payment methods are simplified since
they are collected directly from Bank accounts.
Opportunities
Insurance penetration rate is extremely low in the
region, hence with simple and comprehensive Takaful
products, a value proposition can be created and higher
level of penetration can be achieved.
By the value added proposition achieved through
BancaTakaful more low to medium income groups can
also be brought under the umbrella of protection.
Challenges
Segmentation of the Client Base.
•The traditional "mass market" BancaTakaful
•Private BancaTakaful (aimed at High-net worth individuals)
•Corporate BancaTakaful and SMEs
Products should flow through the banks network
easily.
Responding to the customers needs rather than
offering off the shelf products.
Risk Assessment, Training of the Bank staff and
Remuneration.
PQGTCL Proposition
• We facilitate our Islamic Banking partners to provide
seamless banking and Takaful services to their clients
through our complete range of products.
• We offer specialized discounted rates for our
customized BancaTakaful products
• Depending on the particular model we are following,
we offer attractive commission rates for Takaful
products cross-sold through the banks.
Direct BancaTakaful Model
• We offer Takaful support to Islamic banks at discounted
rates.
• The banks pay the contributions directly to us.
• The rates offered to the banks under this model will be
net of commission.
• The banks merge our specific Takaful product into their
own product to produce a BancaTakaful product.
• The banks offer BancaTakaful products to their customers
apparently “free of cost”.
• Simplified products such as Personal Accident, Home
Shelter Takaful, etc may be included under this model.
Indirect BancaTakaful Model
• We enter into a cooperation agreement with our Islamic
Banking partners
• While selling their banking products, the bank offers to
arrange Takaful coverage to their customers from us.
• The bank then refers the client to us or obtains and forwards
their details to us.
• We offer our products to the Bank’s clients on specially
reduced rates.
• Contribution is either paid directly to us or through our
partner bank.
• We pay the bank a commission at a pre- agreed rate.
• This mechanism works well for complex Takaful products such
as EAR, CAR, Machinery Breakdown, etc
Products Ideal for
Personal Financing
1. Home Musharakah:
•
Fire & Allied Perils Takaful: covers property against the risk of fire and
other perils such as lightning, explosion, riot & strike, earthquake, atmospheric
disturbances, burglary, etc.
•
Personal Accident Takaful: covers risks of accidental death, total
disablement, temporary total and temporary partial disablement; 24hrs,
worldwide cover.
2. Car Ijarah:
•
Private Car/Commercial Comprehensive Takaful: provides
comprehensive coverage to the vehicle against risk such as fire, hail, theft,
snatching, whilst in transit, 3rd party death or bodily injury, 3rd party property
damage, emergency medical expenses and any accidental damage to the vehicle.
•
Personal Accident Takaful
…Personal Financing Takaful Products
(Cont’d)
3. Hajj & Umrah Financing Scheme
• Hajj & Umrah Travel Takaful: covers risks of
accidental death, total disablement, temporary and total
partial disablement, hospitalization expenses due to accident
or illness, emergency medical evacuation expenses, expenses
for repatriation of mortal remains, loss of baggage and loss
of passport while travelling for the purpose of performing
Hajj and Umrah.
Products Ideal for Deposit
Accounts
1. Shop Owners Takaful: covers building, contents, stock
and cash against the risks of fire, explosion, riot and strike,
earthquake, rain water damage, flooding, vehicle impact damage,
loss of rent, burglary and armed hold up, etc
2. Personal Accident Takaful
3. Home Shelter Takaful
Products Ideal for Project Financing
1. Marine Cargo Takaful: covers machinery, equipment or material against
the risks during transit either at sea, in air or land.
2. Marine Advance Consequential Loss Takaful: covers the
consequential loss resulting from loss or damage to the machinery, equipment or
material during transit.
3.
Contractor’s All Risk Takaful: covers contract works against risks such as
4.
Erection All Risks Takaful: covers erection works against risks such as fire,
5.
Principal’s Advance Consequential Loss Takaful: covers consequential
fire, earthquake, malicious damage, storm, flooding, lack of skill, 3rd party
liability, etc.
earthquake, malicious damage, storm, flooding, lack of skill, 3rd party liability.
loss resulting from losses covered under CAR and EAR policies.
Products Ideal For Fixed Assets
Financing
1. Marine Cargo Takaful
2. EAR
3. Fire & Allied Perils Takaful
4. Machinery Breakdown Takaful: covers machinery
against the losses resulting from risks such as defects in
casting and material, faulty design, short circuit, lack of skill,
etc.
Products Ideal for Corporate Financing
• Our Complete Product Range Can Be
Offered!
The Way Forward
To move beyond product-oriented cross-selling to customer-focused
cross-buying requires a holistic approach to BancaTakaful.
The right customers (as identified by customer segmentation) need to
be provided with products which are attractive (to both the customer
and the BancaTakaful provider) through convenient distribution
channels.
Reinforced by accurate and usable data, the organization will use its
processes and rewards, to create a culture and behavior which result in
a customer-focused and profitable institution.
These components of a comprehensive BancaTakaful program really do
add up to many times the sum of its parts.
Jazaak Allaaho Khayran
(May Allaah Reward You)