Pakistan: Motor business contributes over half of takaful volume
Source: Middle East Insurance Review | Aug 2022
The general insurance industry in Pakistan generates a total annual premiums of PKR133bn ($615m), of which takaful accounts for around 10%, according to Salaam Takaful managing director and CEO Rizwan Hussain.
In an interview published in Business Recorder, he said that over 50% of takaful business in the country is derived from the motor branch. Islamic banks are the main source of auto finance in Pakistan, and motor takaful is bundled with these loans.
Mr Hussain said that while Islamic banking tries to bring some change to promote shariah-compliant business. “Nothing major has been done by takaful companies to create awareness to bridge the knowledge gap to penetrate the masses.”
Although the consumer psyche in Pakistan is largely driven by religion in the social, economic and political fields, insurers’ marketing budgets have not been used adequately for mass marketing, because of the limited focus on the consumer market, Mr Hussain noted. This thus holds back takaful.
To increase takaful penetration, he suggested that the authorities take the initiative to promote financial literacy in Pakistan. Moreover, the government needs to enforce compulsory insurance such as third-party liability insurance and group life insurance mandated by labour laws. In addition, Pakistan, being an agriculture-based country with a huge reliance on agricultural produce, must have a national crop insurance/takaful scheme, he said. Furthermore, the lack of innovation in the insurance sector, which would address consumer needs and demand, has stalled the march towards significant achievements. M