Law and funding

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INDUSTRY OVERVIEW/ANALYSIS

Insurance

Insurance, in law and funding, is a shape of uncertainty management primarily used to prevaricate against the uncertainty of a contingent loss. Insurance is defined as the equitable transfer of the uncertainty of a loss from one entity to another in exchange for a profit. An insurer is a company selling the insurance. The insurance rate is a factor used to determine the amount called profit, to be charged for a certain amount of insurance coverage. Uncertainty management, the practice of appraising and controlling uncertainty has evolved as a discrete field of study and practice.

History of Insurance

Insurance appears simultaneously with the appearance of being civilization. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient shape than the first. In such an capital and society, we can see insurance in the shape of people facilitating each other. For example, if a house burns down, the members of the society make uncomplicated build a new one. Should the similar thing happen to one's neighbor, the other neighbors must facilitate. Otherwise, neighbors will not get ease in the future. This type of insurance has survived to the present day in some countries where up to date money capital with its financial instruments is not widespread (for example countries in the territory of the shapeer Soviet Union).

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The Greeks and Romans set up the origins of health and life insurance in 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of member upon death. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed.

The first insurance company in the United States underwrote fire insurance and was shapeed in Charles Town (up to date-day Charleston), South Carolina, in 1732. Benjamin Franklin facilitated to popularize and make standard the practice of insurance, particularly against fire in the shape of perpetual insurance. In 1752, he founded the Philadelphia Donations ship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make donations s toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the uncertainty of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system (commonly referred to as the Optional Federal Charter (OFC)) for insurance similar to that which oversees state banks and national banks.

Insurance in Pakistan

Pakistan is in the process of reshaping its market to meet the challenges of a global marketplace. The government has set upd a range of reshapes designed to promote and consolidate Pakistan's position as an emerging market in the region. The changes have resulted in a deregulated and liberalized financial sector marketplace.

Pakistan's life insurance sector, nationalized in 1972, operated under the aegis of the State Life Insurance Corp. and Postal Life Insurance until 1992, when the government opened it to private sector participation. Foreign companies are no longer barred from the life insurance business, but they are restricted to minority ownership. Private companies function in nonlife insurance areas, but the government insurance business is controlled by the National Insurance Corp. One of the state's first steps was to standardize and reduce profit rates and to encourage reporting among a wider segment of the population. In 2001, there was US$$168 million of life insurance written in Pakistan.

Although filing of rates is no longer required, there are, however, separate parts in the Ordinance on Market Conduct & Intermediaries which lay down the duties/responsibilities of Direct Insurance Companies and of Intermediaries. The developments in the regulatory environment in Pakistan are in line with those in the International markets. Compliance with regulations is becoming exceedingly important.

Historical development of Insurance:

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From the earliest days, Man has organized himself to control three main hazards which confronted him, and still do.

These hazards are

  • DYING TOO SOON
  • LIVING TOO LONG
  • BECOMING DISABLED

The fundamental principle of life Guarantee is to give financial safety/money to meet financial losses caused by these hazards.

Life Guarantee originated and developed to decrease the impact of these hazards by grouping together with others and thus sharing the uncertainty .

The story of the origin of life insurance is very inspiring. The idea of guarding against uncertainty is almost as old as mankind. We know that Joseph recommended storing grain during seven fat years in Egypt against the impending seven lean years. Centuries ago in England, little groups banded together into guilds and societies. Members of these guilds and societies by paying little sums were assured that a certain measure of relief would be given to their families if the bread winner was taken away. In 1705, The Amicable Society for a Perpetual Assistance Office was founded and it became England's first successful Life Insurance Company.

Life Insurance as we know today, developed from these little beginnings into a gigantic industry which gives people the safety they need to maintain financial soundness, morale, and faith. Through war, inflation, deflation, depression, boom, panic, epidemic, and all kinds of catastrophes, life insurance gives the individual the solid financial footing needed to forge ahead as it is based on sound and scientific principles. Its record of service can not be approached by any other financial institution. At the times when Banks failed by the hundreds and the investment companies went under, the Life Insurance Companies paid their dues in full and survived the turmoil. Life Insurance Companies have maintained an enviable record in the face of almost every conceivable trial.

Life Insurance is really income insurance, a new basis of income replacing the earning power of the cash winner if unfortunately he is taken away. It is in a sense, time, because it is money a person did not have time to build up; an estate that will complete the plans there was not time to finish.

Life Insurance is sold not because somebody may expire, but because someone must breathe. If people pass away, the contracts which the life insurance negotiator has sold are LIFE for the survivors. If people live, the agreements are life for their old age. While citizens live, their indentures assure effectual saving and gathering of money and capital for emergencies and for chances. It is an unequaled vehicle of savings, defense and enlargement which has stood the examination of time and given people the security they need to maintain financial dependability and calm of mentality.

TYPES OF LIFE INSURANCE:

Here are two main kinds of life insurance

  1. Term insurance
  2. Whole life insurance

TERM INSURANCE:

In a phrase life insurance strategy the receivers are paid only if the insured dies within the specified period, otherwise the income are not returned to the policy holder.

In a term life insurance policy neither the recipient nor the policy owner obtains any lead in case if he/ she outlives.

Types of Term life insurance

Single year term policies

  • Guarantees to pay the receivers only if the insured dies within one year term policy.
  • Five year term policy

    Agrees to pay the recipients only if the insured pass on within five year term policy.

    Long term policies

    May last for ten, fifteen or twenty years.

    Profit calculation for term insurance:

    Statistical and mathematical estimates are used for scheming profits for term insurance. To make clear the concept consider consider the following example.

    suppose that total 100 people of the alike age say 30 years buy a RS.10,000/=one year term policy each. Considering the mortality table or statistics we can know the death rate of the age 30 years of that area. For example the death rate is 3.thus as the total policy holders are 100 this means that the company had to disburse three death claim.

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    This means that each policy holder has to pay RS.288 for the year to get the gain of RS. 10,000/ in case of his/ her death.

    1. ORDINARY LIFE INSURANCE
    2. LIMITED PAYMENT LIFE INSURANCE

    Ordinary life insurance:

    In the first case it presents life time protection to age 100 and the death claim is a certainty. If the insured is still alive at age 100 the face amount of insurance is paid to the policy holder at that time.

    In adding up profits do not raise from year to year. But stay level through the profit paying period. Under an common life policy the policy owner is over charged for the insurance protection during the early years and under charged during the later years when income are insufficient to pay death claims.

    Ordinary life insurance also has an investment or saving element called a cash surrender value. The cash values are due to the overpayment of insurance profits during the early years. As a result the policy owner builds cash fairness in the policy. The policy may be surrendered for its cash value, or the cash value may be borrowed under a long provision.

    The cash values are relatively little during the early years, but increase over time.

    Finally it contains cash give up or non fine options, divided options and settlement options that can be used to meet a wide variety of financial wants and objectives.

    Limited Payment life insurance

    Limited payment life insurance is a new type of whole life insurance, provided that insurance protection for the whole life. The essential dissimilarity with the common life insurance is that here the profits are salaried for a specific period. For example a person may buy an insurance profit of Rs.100,000/ and the profit periods may be say 5,10,20, years .thus after this specific period he/she will not pay the profits. The tremendous shape of limited payment life insurance is that where only one profit is paid and the protection is get for the whole life. But of course the amount of profit is as high as the profit period is less. That's why people often like better ordinary life insurance as compare to limited payment life insurance.

    Other types of life insurance:

    Endowent insurnace:

    This is another type of insurance when the face amount is paid to the beneficiaries if the policy possessor dies during the period. If the policy owner survives at the end of the period he/she will get the face amount.

    Variable life insurance:

    It can be defined as a fixed profit policy in which the death advantage and cash submit values vary according to the investment knowledge of a separate account maintained by the insurer.

    In variable life insurance the profits are fixed and the insurance is for the whole life. As the policy title-holder has the choice to invest the profits differently so the death benefit or cash surrender value vary because of this investment experience of the policy owner. If the investment experience is favorable the value increases and vice versa. But it can never fall below the novel face quantity. Although the insurer takes the uncertainty but the sufferer is finally the policy possessor.

    Universal life insurance:

    It can be defined as a flexible profit policy that gives life time defense under a agreement that unbundles or separates the protection and saving mechanism.

    PREFERRED UNCERTAINTY:

    Many life insurers sell their policies at a lower rate to individuals, this is called preferred risk. They select their policy holder based upon the health, physical fitness, smoking etc.Thus they offer their policy to those whom they consider in critical condition. Here the insurer takes the improbability. The discount for smokers is an example of preferred uncertainty.

    Second to Die life insurance:

    It is one of the figure of life cover that insures two or more lives and pays death benefit at the death of the second or last insurer. The profits are lower than two individual procedures.

    Juvenile life insurance:

    Juvenile life insurance leads to insurance purchased by a blood relation or guardian of a child for that child. The age condition of the child at that time is pleasure differently by different insurers.

    Vanishing Profit Policy:

    Vanishing profit policy is a type of contributing whole life cover in which the profits vanishes after a certain time period. As the policy holder pays profits after a certain period of time the bonus are not given to him rather the dividends are accumulated at interest or used to purchase the paid up profits. After a number of years the accumulated dividends plus future dividends are used to pay the future profits. Thus the profit disappears after a certain period of time.

    Modifying life Policy:

    A modified life policy is a whole life policy in which profits is lesser for the first three to five years and is higher thereafter. It is eye-catching for those who anticipate that their revenue will increase in the future.

    Major Unislamic Points in Conventional life insurance system:

    UNCERTAINTY :

    In islam the world gharar is used for uncertainty which means transactions characterized by ambiguity at their inception. Our holy prophet prohibited gharar transactions.

    Thus Gharar is the sale of possible items whose existence or characteristics are not certain.

    As insecurity is one of the basic characteristics of up to date life insurance system. Therefore it is termed as haram for Muslims.

    Interest:

    Another source of income for the insured and the insurer is investing in an interest based banks, normally in the compound interest, which is not acceptable in Islam.

    In the holy Quran the world "riba" is used for interest and is strongly prohibited by Allah. Quran has clearly differentiated between trade and riba. Allah says in the holly Quran.

    Those who take riba (usury or interest) will not place but as stands the one whom the demon has motivated crazy by his touch. That is because they have said: Trading is but like riba. So, whoever gets an counsel from his Lord and stops, he is allowed what has passed, and his matter is up to Allah. And the ones who relapse back, those are the people of Fire. There they remain forever.

    Allah destroys riba and nourishes aid. And Allah does not like any sinful disbeliever.

    There are other verses and Ahadiths about interest, but only the above verse is much enough for the Muslims to abstain from interest and thus the traditionalist insurance system.

    Unequal treatment:

    In a usual system the p policy possessors are not treated uniformly. For example the aged people and the smokers are considered more close to to death than normal people. Again the company is legally responsible to pay the whole amount of indemnity if the policy holder dies, no matter whether he has paid only a single sum. Thus creation money at the expense of others is just haram in Islam.

    Other investment of Conventional insurance systems:

    Islam allows us to invest money only in those businesses or areas who are without charge from all kinds of un Islamic behavior, like if the corporation spends in conventional bonds , in film industry or in tobacco etc., then to take insurance from such companies is not allowable ( haram ) in Islam .nearly all of the conformist insurance companies are investing in such type of businesses , another testimony for their being un Islamic.

    Betting:

    Term insurance is like betting where you can win the bet only by forfeiting your life. The profits invested by you are not returned to you, the company holds control of your profits, which is surely unIslamic and unjust.

    Takaful Industry Analysis/Overview

    Currently, it is understood that there are around 125 Takaful machinistss universal. It is at the alike time estimated that the combined total assets and gifts s (profit) of these machinistss situate at around USD8 billion and USD8000 million respectively. Obviously, this amount is small and very insignificant compared with the total number of Muslim population of Islamic countries, estimated at around 800 million people.

    According to data compiled by Carpenter Bowring London, a company under the Marsh Mc Lennon Group, the world major reinsurance broker, insurance penetration particularly for the life sector in profit terms in Muslims countries is less than 1% of GDP. It is therefore obvious that Takaful has huge potential to be developed with its pure market size hitherto remained untapped.

    For this reason, existing as well as would be machinistss must intelligently position themselves in terms of product design that can satisfy the needs of the market. In this regard, products that would facilitate to improve savings among the masses, such as family Takaful plans which are essential components for ensuring economic growth should be actively promoted.

    As for the access of life insurance, maybeMalaysiais relatively ahead among most Islamic and developing countries. At present, Malaysia has attained penetration rate of 28% as against than 5% for most Muslim countries, compared to the established of Singapore, Japan and most European countries with rates ranging from 65% to 150%. The co-relation to the relatively high market penetration is further reflected from the savings rate ofMalaysia, considered comparatively high at 39% of GDP.

    Countries with elevated savings rate would generally be able to maintain economic growth and would not have to depend upon help or aid from outside. Thus from the economic standpoint, Takaful would be useful not only as a means to instill good savings habit and grow thrift at the individual level, but also make easy to accelerate investment potential for the ummah as whole. This in turn would be helpful for the economic development and well being of Muslim countries themselves.

    As demonstrated from the little behavior undertaken by Takaful Malaysia,Malaysiahas taken the lead in bringing Takaful to the international playing field. Asides the progression within the Asian region,Malaysiahas make possible other parties outside the region to set up and pro mote Takaful in their respective countries. For this principle Takaful Malaysia has established joint-venture programmed inSri Lanka,Saudi Arabiaand has also given technical help for Takaful machinistss inAustralia. appeal for similar backing has been sought fromLebanon,Bangladesh andAlgeria.

    In another interesting development, the 'Developing-8 (D-8)', at its Second Heads of State Summit in Dhaka, Bangladesh on 1st and 2nd March 1999, issued a assertion which amongst others agreed to set up, encourage and develop Taka­ful in all D-8 countries. In relation to this it was also determined that Malaysia be given the task to assume the lead role in planning, coordinating and providing technical expertise and other related resources for this principle .

    As a follow-up action, an "International Workshop on Re-Takaful" was held inKuala Lumpuron 31st May and 1st June 1999, whereby a similar pronouncement was issued amplification the earlier commitment of the D-8 Summit to hasten the pace of the introduction and development of Takaful amongst D-8 and other OIC countries. At the similar time it was also decided that the status of ARIL be transshipped as the Re-Takaful machinists for the D-8, whose capital shall be delayed and to be subscribed by the member countries. In line with this move, ARIL has come out with a five-year strategic plan to enlarge its paid capital to USD50 million by 2006. Obviously, this development augurs well for Takaful as a whole and it opens up new chances as well challenges for the Takaful machinistss.

    Chances and Challenges

    The practical posture as abovementioned visibly presents boundless likelihood for Takaful. Coupled with the pure size of the ummah calculation to more than 1.2 billion people, Takaful therefore has no frontiers. certainly the world is a colossal market for Takaful products. With its generally superior facial appearance evaluated with conventional insurance policies, it is almost impractical for Takaful to be out of the conventional. For example, inMalaysiaapart from individuals, more and more business and multinationals are using takaful products together with among the non-Muslims society.

    Nevertheless, chances do not come by a brush of a finger. A number of crucial issues have to be addressed to ensure integrity and acceptability and hence brighter future for Takaful. Some of these issues may be summarized as below

    Financial Capability

    Machinistss should be sufficiently capitalized in order to have a meaningful financial strength, so that they would be able to meet the demand of the market expediently. Relatively weak machinists may not only obstruct its development but may have to depend seriously on the sustain of Re-Takaful machinistss, meaning relyingpresently on the compassion of conventional re-insurers. Without sufficient financial capacity the ability to retain absorb more of the uncertainty s would be virtually impossible. Although satisfactoriness of capital is viewed differently one country to another, it should however have an acceptable minimum condition reflecting the minimum level accepted globally. In Asian, the figure is between USD 12 million to USD15 million. In this gaze at, establishment would have an authority on this material; as for example inMalaysia, through the enforcement of the Act, the requirement for solvency margin and the compliance of minimum capitalization can be effectively legislated.

    Manpower and Expertise:

    Being a service industry, the pace of progression for Takaful would to a greater extent depend upon its man power and competency of its human resources. Lacking of trained and experienced manpower would hinder the development of Takaful. At pre sent, developing countries in general, of which most of the Islamic countries are in this category, are facing scarcity of qualified and trained personnel in the field of insurance. For this reason, Takaful is also affected in view that experienced insurance personnel are at present shape the core staff for most Takaful machinistss. Special programmes therefore should be begun to train the manpower not only on the scientific aspect of insurance but also in regions casing funding and investment as well as approval of Shariah. Towards this end,Malaysiahas begun to participate its leading role by organizing and conducting particular educational programmes for Takaful workers in the Asian region-as-well as others through the shapeation of Bank Islam Research and Training Institute (BIRT). It is also felt that bodies like Islamic Research and Training Institute (IRTI) of the Islamic Development Bank (IDB) would be able to think similar role. Coordination of these a range of bodies is vital to keep away from expenditure and over lapping of functions.

    Takaful Industry in Pakistan

    The Takaful market is still in a shapeative phase and market projections estimate growth rates between 15% and 20% over the next 10 years, reaching US$7.4 billion in profit by 2015. With confronts around customer service and productivity, technology can enable this growing industry through its shapeative stage.

    Pakistan is among the top 10 most crowded nations in the world. This makes it a very lush market for Takaful, one with some attractive defy. Takaful is the latest "wave" in financial protection. Pakistan saw its first Takaful machinists, in the General side, start in 2006. Since then, another two machinistss in General and two in Family have come in the picture. Dawood Family Takaful being the most recent contestant is the only Pakistani Owned Takaful Company and is highly capitalized. Takaful is not just another tool for uncertainty mitigation and financial protection. Rather, it is a system which works as a source of good for those that utilize it and the society at large. Tools like these are critical for developing nations, especially those seeing fast economic growth. rising personal debt, the extend divide between the haves and have-nots, and other such issues regularly plague those in rapidly growing developing nations. Pakistan is one of those countries.

    Earlier to 1972 there had been 43 poles apart Life Insurance companies in Pakistan. Bit during the nationalization procedure all these companies were merged into one big company, State Life Insurance Company. This control was in charge of the insurance industry until the de-nationalization process in 1992. The following four years brought 4 more companies to the Pakistani market.

    • In 1992 the Eastern Federal Union Life Insurance was the first to obtain the in service license.
    • The Metropolitan Life Insurance followed in 1994.
    • The third company to come into the market was American Life Insurance Company in 1995.
    • The fourth and last company to get its license was Commercial Union Life Guarantee IN 1996.

    After those four companies had been issued their license, no other life insurance company was established in Pakistan for about 11 years. In 2007 Pak- Qatar Family Takaful Limited, the first family Takaful machinists, offering an option to conservative Life Insurance in Pakistan, had getd its license and started its operations. Several other companies have applied for process licenses too and are planning to enter the market which will make easy in making a healthy rivalry and greater Takaful wakefulness in Pakistan.

    To really understand the probability for Takaful in Pakistan, we require to see where the present insurance sector stands and. The best way to understand this by contrasting it to another nation which shares many character with Pakistan, India, a much larger neighbor, has an insurance diffusion of 4.8%, against Pakistan's 0.8%, and its insurance density is US$38.40, against Pakistan's US$5.90. These values create it very clear that there exists a important gap in Pakistan for financial defense tools. As we know, achieving prospect is not as simple as shapeulating them.

    Growth of Takaful in Muslim & Non-Muslim Countries

    The very initial Takaful company was recognized in 1979 - the Islamic Insurance Company of Sudan. Today there are some 28 registered Takaful company's universal symbols Takaful directly and 10 more as Islamic windows or marketing agencies placing insurance uncertainty with conservative and Takaful companies. In fact the figure of Takaful companies is higher as all insurance companies in Sudan are thinking to function in harmony with Islamic Shariah values. In addition, new Takaful companies have been established newly in Sri Lanka and Tunisia. At least four more Takaful companies are under shapeation in the Middle East (viz. Kuwait, UAE and Egypt). Several other Takaful companies are being considered in various countries such as Pakistan, Australia and Lebanon. It is also understood that interest is exposed in Takaful in South Africa, Nigeria, and some of the shaper states of the Soviet Union. List of Takaful companies is at Appendix.

    Takaful industry in the Middle East is under-developed compared to other markets such as Malaysia. The more thriving companies in the Middle East have grown at 10% p.a. whereas in Malaysia the rate of growth has been 60%p.a.

    A total insurance profit income of the world is $2.4 trillion whereas in Takaful the sum earnings profits are $2.1 billion. Against normal insurance only five percent population of Muslim countries are availing the insurance amenities only where it is a legal binding to get insurance. 95% population is not buying insurance due to the idea that the insurance is un-Islamic. By means of Takaful as Islamic insurance a big population out of remaining 95% can be paying attention to get insurance in the shape of Takaful. Re-Takaful (Reinsurance) companies are a few in the world and generally the Takaful machinists are using the military of normal reinsurers.

    The shared based insurance companies have been given that insurance products connecting to personal lines and of limited amount. The Takaful machinist on shared basis cannot insure the large commercial ambiguity s involving huge amount of capital because these uncertainty will need the insurance companies with large amounts of wealth. The Saudi Government has increased the boundary of capital for an insurance company to 100 million Ryals.

    In Pakistan the Securities and Exchange Commission of Pakistan (SECP) is the regulatory authority of insurance industry in accordance with the Insurance Ordinance 2000. Here the Takaful business has not so far been set up. However, the Insurance Ordinance, 2000 has a provision for Takaful business. The Islamic banking institutions need the support of Takaful business. As such the SECP has comprised a four-member task force, which will border rules and regulations for Takaful business in Pakistan. It is also learnt that Pak Kuwait Investment Corporation has been allowed to set up a Takaful company in Pakistan under the name of "First Takaful Insurance Company Ltd." with official capital of Rs.100 million.

    Growth of Takaful Industry in Pakistan

    At present there are two Family Takaful and five life insurance companies operating in the country. With a penetration of 03% of the Gross Domestic Product (GDP), Pakistani market is still largely unused. There are a lot of odds in this industry because only 7-8 percent of the families have been insured. There is intense need for halal savings plus protection products in the country. However, being a novel sector, Takaful is experiencing violent rivalry from conventional players as they are considering Takaful a threat to their long-term survival. Overall the Life insurance industry is growing rapidly in Pakistan. In last few years the growth of the industry is more than 30%. Banc guarantee is also playing a major role in the growth and the add to in infiltration of the market. With in its second year of operations, Pak-Qatar has come out as one of the major players in the market and made its company felt.

    Pak-Qatar Takaful won National and international Awards (2009)

    The Marketing & Communication department was active in creating nationwide and international consciousness about Takaful and Pak-Qatar Takaful Group in the year 2009. The year begins with a planned below-the-line (BTL) promotion campaign in April aimed at establishing company identity and brand fairness which continued till August. The campaign proved crucial for our Sales power to achieve their sales goal.

    Nomination for "Best Marketing Strategy" Award, June-July 2009:

    The six-month marketing movement was lauded for its trend-setting Takaful publicity strategies and was nominated for "Best Marketing Strategy" category award by the Takaful Summit held in Jumeirah Carlton Tower, London, UK. The recognition set Pak-Qatar Takaful Group on the global Takaful map.

    The suggestion acknowledged the efficiency of the campaign in terms of promoting Takaful amongst the masses.

    Won "Best Family Takaful Machinists" Award - August 2009:

    On the termination of our marketing campaign, the 1st National Achiever Award, which is an self-governing and important entity, presented Pak-Qatar Family Takaful Limited with the "Best Family Takaful Machinists" award.

    The award endorses the company's role in the Takaful industry and highlights it's per shapeance in boosting the resources of Pakistan.

    Won "Brand of the Year" Award - December 2009:

    The Marketing & Communication section won the uppermost brand/marketing honor of Pakistan for its advertising campaign: the "Brand of the Year" award. The award is hold up by the Government of Pakistan, academic Property Organization of Pakistan (IPO), Pakistan Standards & Quality Central Authority (PSQCA), Consumer Foundation, Pakistan Export Corporation (PEC), and Brands Award Council of Pakistan respectively.

    The award distinguish the marketing champions of national and multinational brands in Pakistan that have recognized themselves at altitude in consideration of both, the consumer preference and current year advertising standing.

    The selection procedure comprised of nationwide attribute based consumer surveys, brand audits, and center group expert analysis.

    Won "Best Use of Technology" Award - December 2009:

    The year finished on another high note for the Pak-Qatar Takaful Group. This time CPI Financial presented Pak-Qatar Family & General Takaful with the "Best Use of Technology" award at a Gala Dinner held in Emirates Tower, Dubai, U.A.E.

    The award is familiar with the cutting-edge technological superiority of Pak-Qatar Takaful Group in the global Islamic Funding industry.

    The selection procedure was carry out through on-line survey available only to the element to the CPI Financial "Islamic banking and funding magazine."

    CHAPTER 4

    ORGANIZATION OVERVIEW

    Pak-Qatar Family Takaful Limited

    Pak-Qatar Family Takaful Limited, the initiator of Family Takaful in Pakistan, is considered as technology-driven Shari'ah Compliant company providing need-based and cost-effective Takaful results in Pakistan.

    Incorporated in 2006, and started processes in 2007, the company is registered and managed by the Securities and Exchange Commission of Pakistan (SECP). An self-governing Shari'ah Supervisory Board managed by Mufti Muhammad Taqi Usmani, certifies all products and procedures for Shari'ah conformity. The company is rated A- (Stable Outlook) by JCR-VIS Credit Rating Co. Ltd.

    Pak-Qatar is the first devoted Takaful Group in Pakistan starting with both Family and General Takaful operations. The paid-up capital of Pak-Qatar Family is Rs. 533 million; the joint paid-up capital of the Group is Rs. 840 million.The company is rated A- (Stable Outlook) by JCR-VIS Credit Rating Co. Ltd.

    The Company is held by some of the strongest financial institutions in the state of Qatar such as Qatar Islamic Insurance Company (QIIC), Qatar International Islamic Bank (QIIB), Qatar Islamic Bank (QIB), Qatar National Bank (QNB), the Amwal Group, Masraf Al-Rayan and Munich-based FWU AG. The combined mutually assets under management of the sponsors amounts US$ 26.12bn as at 31 December, 2007.

    The company is further make stronger by its Re-Takaful arrangements with Munich-Re, Hanover Re and Takaful-Re. We are well-positioned to make certain faultless client service following serious investments in procurement of state-of-the art technology from Malaysia and in SAP ERP solutions. We have strategic BancaTakaful alliance with FWU AG.

    Pak-Qatar is there in multiple heartlands of Pakistan and fast-moving into smaller cities and towns. As a flag-bearer of Takaful, we are constantly engaged in community-development through Takaful solutions.

    The PQFTL have branches in some major cities like Karachi, Lahore, Islamabad, Peshawar, Faisalabad, Kotli, Gujarat, Gujranwala, Multan, Quetta, RahimYarkhan, Hyderabad, Rawalpindi and also having many sub-offices in different areas of Pakistan.

    Pak-Qatar Vision

    Providing financial protection through Takaful to everyone.

    Company Mission

    • Promote Takaful along with the masses, surrounding education and alertness, and present an image that is steady with our ideological values.
    • Stick to best ethical practices in all feature of our operations, while biding by the Shariah and the law of the land.
    • Authorize our employees by inspiring, directing, allowing, and supporting them.
    • Ensure our carrying to the community and the environment with fineness.
    • Ensure customer approval by contribution quality products and services ambitious by their needs.
    • Ensure best returns to the shareholder.

    Pak Qatar family Takaful is divided into three section and their regional head offices are in

    • Karachi
    • Islamabad
    • Lahore

    Company Sponsors

    In company's backer they have the following tough financial institutions and also the world leading financial institutions in their sponsors.

    Qatar Islamic Insurance Company (QIIC)

    The open up of Takaful in Qatar is one of the fastest growing companies in the state of Qatar.

    Qatar International Islamic Bank (QIIB)

    QIIB is one of the most successful Islamic banks in the State of Qatar.

    Qatar National Bank (QNB)

    QNB is one of the main banks in Qatar with the largest share of the banking sector. It has a well-built presence in all parts of the financial sector.

    For complete profile of QNB please visit, (www.qnb.com.qa)

    The Amwal Group

    The Amwal Group is Qatar's leading investment banking, asset management and capital management firm.

    For complete profile of The Amwal Group please visit, (www.amwal.com.qa)

    FWU Group

    FWU Group is one of the leading providers of Takaful products in the world. Headquartered in Munich, Germany it has offices in Luxembourg, Dubai and Kuala Lumpur. Its will considered and circulated products have enabled it to earn multiple awards from Islamic Financial industry associations.

    Masraf Al Rayan

    Masraf Al Rayan is a evolution in the world of banking, a present personification of future Shariah compliant banking. Masraf Al Rayan has a paid up capital of over $1 billion, over 600,000 shareholders and stand for a important new development as the region's only fully fledged commercial and investment bank with an entirely Shariah compliant portfolio of products.

    The bulk of the PQFTL sponsors' are leader financial institutions from the state of Qatar and in terms of market share they make up over 55% of the Qatari banking sector. Total shareholders' equity for all our sponsors comes to over US$5.5 billion and total assets come to over US$35 billion.

    Shariah Supervisory Board

    It is compulsory for a company to have a Shariah board if the company deals in Islamic Finance or wants to introduce the Islamic products in the market, according to the necessities of Security Exchange Commission of Pakistan (SECP) which consists of 3 members 1 chairman and 2 advisors. Pak Qatar Family Takaful has its Shariah board consists 3 element well known scholars.

    • Justice (Retd.) Mufti Muhammad Taqi Usmani (Chair man)
    • Mufti Muhammad Hassan Kaleem ( Co Advisor)
    • Mufti Ismatullah (Co Advisor)

    Types of Products of Pak-Qatar Takaful

    Individual Takaful Products

    The chance of a early death, a life-altering disability, or loss of any material control like a house or a car during fire and robbery is a risk all too real to be unnoticed or left unaddressed. These risks involve momentous financial losses that could leave entire families impoverished and businesses insolvent in a single blow. Takaful Savings can help alleviate these risks in Halal and Ethical way.

    Share 'n Care Savings Takaful:

    Why borrow loans and incur debts? A more distinguished and sensible way of satisfying your responsibilities of getting your children married, purchasing a new home, provisioning for departure income, family vacation, hajj/umrah, is through the Share 'n Care Savings Plan.

    Share 'n Care Savings Plus:

    This plan is custom-designed for High Net Worth Individuals (HNWI) and differs from the standard Share 'n Care Plan in terms of annual payment expenditure and membership period.

    ABC Takaful (Education Plan):

    unluckily, with the rising cost of education and the likely tragedy of the breadwinner's death/disability in the family, children are dispossessed of the chances of higher education that they be worthy of. Protect your child's future by obtaining the ABC Takaful Plan.

    Corporate Takaful Products

    Companies who recommend excellence reimbursement are more likely to draw, retain, and inspire their employees. Takaful, in new times, has become one such pretty plan for employers worldwide to line up their strategic financial and human resources objectives in Shari'ah-compliant, totally clear and ethical way, thereby adding value to their corporate image and individuality. Pak-Qatar Family Takaful Limited specializes in corporate Takaful solutions and offers total employee benefits tactics to companies.

    Group Healthcare Takaful:

    The Group Health Takaful Plan is designed to provide to your employees' well-being. It wraps their hospitalization due to any reason, major medical expenses, maternity/childbirth as well as day-to-day medical everyday expenditure.

    Group Family Takaful:

    Group Family Takaful gives financial hold up to families and dependents of your employees in case of their death or disability. This will help to decrease their financial load in those difficult times.

    Group Salary Savings Takaful:

    This is a unit-linked investments and investment map for groups of not less than 10 lively salaried employees in an rganization. donations are automatically subtract from the monthly salary or the Provident Fund ensuring ease and convenience to both the employer and the employee.

    Two main types of Plans

    Family Takaful

    Group Family Takaful is a risk reporting plan that provides protection to participant employees in the event of death or disability, so that a multiple of that employee's yearly salary can be paid to his/her family or dependants to ease their financial difficulties. The basic coverage can also be improved by adding coverage of risks that are arising out of a natural calamity or by irregular accidents.

    The Plan is either contributory or sponsored by the employer/company as a yearly renewable agreement. The benefit provides payment of the agreed coverage amount in the event of death, due to any cause, of a participant employee.

    Along with this plan employees can be offer with any of the following additional coverage.

    Group Accidental Death Family Takaful

    Accidents are always unexpected and sometimes deadly. You can't lessen the emotional upset, but you can certainly soften the financial one. Group unintended Death Family Takaful Benefit gives the loved ones something to start with after the permanent loss of income by paying an extra coverage amount.

    Group Permanent Partial Disability Family Takaful

    Accidents are volatile and so are the penalty. They may lead to a disability which is partial but lasting. This advantage provides a financial pillow against such events; the participant gets a particular amount in case of an possibility as per the specified agenda.

    Group Permanent Total Disability Family Takaful

    An accident can be the cause of a disability which is permanent and total. This advantage provides a financial cushion in such situations to a member where he/she is unable to earn his living. The enduring disability payouts are a fraction, according to a specified schedule, or the full amount of coverage to the member according to the nature of loss.

    Group Temporary Total Disability Family Takaful

    In a state of affairs where the partaker is lucky enough to escape from a major wound of a permanent nature and is for the time being disabled for a short period in an accident, the benefit will cover for the loss of wages in the shape of a weekly payment of an agreed amount during the whole period of disability.

    Funds management strategies

    Following are the available investment chances, under the Takaful rules, 2005

    1. Shariah complaint government securities, such as sukuks.
    2. Immovable property.
    3. Direct exposure the stock market.
    4. Islamic mutual funds.
    5. Placement with banks, such s certificates of Islamic investment.

    Individual Family Takaful

    A good education is a basis for success. This is why all parents want to see their children go to high-quality educational institutions and get your hands on knowledge so that they may grow up into scholars, and doctors, and scientists, and engineers, and professors, and good human living being. They work extra hours and sometimes even take loan to pay the school fees and arrange for all the opportunities and the resources needed to build their children's future careers.

    Shouldering the entire future of a child upon the life of one man which may fail him at anytime is a risk all too real to be ignored to left attended to. While loans may give out the purpose in the short-term, it nevertheless puts the parent in the worry of debt repayments later. A better and safer way to protected the continuity of your child's education is to regularly save from your income with our ABC Takaful Education Plan.

    The ABC Plan get into thought the rising costs in tuition fees and cost of books and advises all concerned parents to start planning for their child's higher education at the moment. It will be the most rewarding gift from yourself to your child that will forever be valued

    The ABC Education Takaful Plan

    The ABC Takaful is an Education protection plan which ensures the continuity of the child's teaching even when the parents are not around or cannot afford the tuition fees. This Plan is available to parents stuck between the ages of 18 and 65 for a time period of their choice but it must end when the member turns 85. The ABC Plan is most appropriate for families with younger children.

    Financial analysis of Pak-Qatar Takaful

    Pak-Qatar is the first devoted Takaful Group in Pakistan starting with both Family and General Takaful business. The paid-up capital of Pak-Qatar Family is Rs. 533 million; the combined paid-up capital of the Group is Rs.840 million.

    Major Shareholders of Pak-Qatar takaful

    1. Qatar Islamic Insurance Company (QIIC)
    2. Qatar International Islamic Bank (QIIB)
    3. Qatar Islamic Bank (QIB)
    4. Qatar National Bank (QNB)
    5. The Amwal Group
    6. Masraf Al-Rayan and Munich-based FWU AG the combined together assets under management of the sponsors amounts US$ 26.12bn as at 31 December, 2007.

    Human Resource Assessment

    Qualified professionals from outside have been hired/are in the process of being hired, first and foremost to adopt customer-oriented approach with a view to intensification customers' loyalty as well as to increase market share.

    Many monitory and non-monitory inducements are provided to the employees for the purpose of motivation, and retention.

    The objective of the market psychoanalysis is to determine the attractiveness of a market and to understand its developing opportunities and threats as they relate to the power and weaknesses of the firm.

    Market Growth rate

    As almost 97 percent of the population of Pakistan are Muslims and this company is providing the option of the conventional insurance i.e. (Halal products) so it is fastly capturing the market. Its present growth rate is 14 percent and has a great potential to be the organizer in this industry as it broke all the records in this industry even in the second year of its function.

    SWOT Analysis

    STRENGHTS

    • Shariah board
    • Halal products
    • Flexible plans
    • Waqf fool
    • Motivated staff
    • Good relation among the employees
    • Process to approach customers
    • Inspiring Management in every level.
    • Good appearance skills
    • Ethical and legal behavior
    • Customer need based selling
    • Employee development
    • Team work
    • Positive attitude
    • Continuous process improvement
    • Innovation
    • Speed and responsiveness
    • Caring Managers
    • Inspiring Branch Head
    • Strong financial position
    • Technology

    WEAKNESSES

    • No indispensable pay for the employees from the sale department
    • High turn over

    OPPERTUNATIES

    • Only 7-8% families are insured, so this market has a lot of potential
    • Offering halal products in Islamic country has always edge in opposition to its competitors

    THREATS

    • Number of competitors
    • People sensitive to from the name of insurance
    • Lake of awareness in the midst of the people
    • People have some uncertainties about this such company.