Exclusive Interview with The Financial Daily- Abdul Halim Nasri Chief Executive Officer, DFTL
Why people need risk mitigation?
Be it the human life or property there is a need for risk mitigation. The magnitude of risk may have different connotations for different people but the basic requirement of minimising the losses in case of any eventuality is always there. In Pakistan people have not been able to mitigate the risk primarily because of non-Shariah compliance of the conventional insurance. Till recently Islamic banks were forced to accept the cover note issued by the conventional insurance. However, during last couple of years commencement of business by general and family takaful operators offered opportunities to people to choose either a conventional or a Shariah compliant mode for risk mitigation.
OPTIONS:
People wanted Shariah Compliant products and the absence of these they were forced to go for conventional products of risk mitigation. With the commencement of business by takaful operators now people have options. Dawood Family Takaful has a brief but cherished history. We commenced operations in May 2008 and shortly after the first product of Group Family Takaful a substitute for the 'Group Insurance' of the conventional insurance was launched. We succeeded in developing three 'Individual Family Takaful' products with the names of SUKOON, SALAMTI & SAMAR, approved by the Shariah Advisory Board of Dawood Family TaKaful and SECP Pakistan.
REASONS FOR LOW PENETRATION:
As we started active marketing of our products the tumbling block was lack of awareness among the masses. People are cognisant of various types of threats but very few know the ways to mitigate the risk.
Therefore, often they take the refuge behind rhetoric that seeking risk mitigation is against Shariah, the other but real issue is affordability. The concept can best be understood by the word Takaful an Arabic word meaning 'joint or mutual guarantee'. In takaful participants create a pool from their resources so that they are able to help each other in the time of need. Therefore, the bigger is the pool the lesser burden has to be borne by any participant.
Ways for bringing down tariff:
Cost can be reduced by creating bigger groups, which is not possible without 'contacting masses'. To begin with familiarity and understanding of the word takaful among the masses is a must. To reach the masses Dawood Family Takaful is using different avenues. These include print and electronic media, billboards and banners. The campaigns jointly and severally sponsors by the Pakistani takaful operators have broken the ice. Now people have fairly good understanding of the basic difference between conventional insurance and takaful.
Extending outreach
Creating awareness does not serve the purpose and it has to be supported by ensuring availability of the products at every nock and corner. Dawood Family Takaful follows two-tier approach. We have our own and well trained sales/marketing team and to further augment it we are forming alliances with different commercial banks. It is replication of a globally accepted model of 'Bancassurance'.
It is a time tested strategy whereby commercial banks provide various options to their accountholders. As the interaction of an accountholder is frequent with the banker, with whom he also discusses investment plans, the concept of risk mitigation automatically creeps in. Dawood Family Takaful has already formalized arrangements with The Royal Bank of Scotland, a commercial bank listed at the local stock exchanges. We are also in the process of finalizing arrangement with six more banks. We have a team of more than 300 takaful consultants operating through eleven branches at Karachi (Clifton and Hyderi) Lahore, Faisalabd. Islamabad, Hyderabad, Abbotabad, Rawalpindi, Gujrat, Kharian.
Product array
We have developed three branded products, which have been designed keeping in view the needs of different age groups. The names themselves give fairly good idea of the features and all are investment linked takaful plans. All of these suites best for the participants desire to grow savings and get financial protection along with Shariah compliance. Under the first plan Salamti participants decide quantum of regular contribution subject to minimum amount. These amounts are used for the purchase of investment units and takaful.
The second plan carries a brand name of Sukoon offers takaful along with accumulation of funds for retirement. You have to pay only for fix period of 10 or 15 years and plan shall continued upto retirement age of your choice; 60, 65 or 70 . It pays sum cover along with investment amount in participants account available at the time of retirement. The third plan called Samar accumulates fund for the education/ marriage of the participant's child and at the same time provide protection to the family. In case of earlier death of participant, contribution amount is payable by WAQF on behalf of deceased participant and investment account shall continue to grow. In addition an amount equal to annual contribution shall also be payable to family as pension for remaining term of plan.
Why people need risk mitigation?
Be it the human life or property there is a need for risk mitigation. The magnitude of risk may have different connotations for different people but the basic requirement of minimising the losses in case of any eventuality is always there. In Pakistan people have not been able to mitigate the risk primarily because of non-Shariah compliance of the conventional insurance. Till recently Islamic banks were forced to accept the cover note issued by the conventional insurance. However, during last couple of years commencement of business by general and family takaful operators offered opportunities to people to choose either a conventional or a Shariah compliant mode for risk mitigation.
OPTIONS:
People wanted Shariah Compliant products and the absence of these they were forced to go for conventional products of risk mitigation. With the commencement of business by takaful operators now people have options. Dawood Family Takaful has a brief but cherished history. We commenced operations in May 2008 and shortly after the first product of Group Family Takaful a substitute for the 'Group Insurance' of the conventional insurance was launched. We succeeded in developing three 'Individual Family Takaful' products with the names of SUKOON, SALAMTI & SAMAR, approved by the Shariah Advisory Board of Dawood Family TaKaful and SECP Pakistan.
REASONS FOR LOW PENETRATION:
As we started active marketing of our products the tumbling block was lack of awareness among the masses. People are cognisant of various types of threats but very few know the ways to mitigate the risk.
Therefore, often they take the refuge behind rhetoric that seeking risk mitigation is against Shariah, the other but real issue is affordability. The concept can best be understood by the word Takaful an Arabic word meaning 'joint or mutual guarantee'. In takaful participants create a pool from their resources so that they are able to help each other in the time of need. Therefore, the bigger is the pool the lesser burden has to be borne by any participant.
Ways for bringing down tariff:
Cost can be reduced by creating bigger groups, which is not possible without 'contacting masses'. To begin with familiarity and understanding of the word takaful among the masses is a must. To reach the masses Dawood Family Takaful is using different avenues. These include print and electronic media, billboards and banners. The campaigns jointly and severally sponsors by the Pakistani takaful operators have broken the ice. Now people have fairly good understanding of the basic difference between conventional insurance and takaful.
Extending outreach
Creating awareness does not serve the purpose and it has to be supported by ensuring availability of the products at every nock and corner. Dawood Family Takaful follows two-tier approach. We have our own and well trained sales/marketing team and to further augment it we are forming alliances with different commercial banks. It is replication of a globally accepted model of 'Bancassurance'.
It is a time tested strategy whereby commercial banks provide various options to their accountholders. As the interaction of an accountholder is frequent with the banker, with whom he also discusses investment plans, the concept of risk mitigation automatically creeps in. Dawood Family Takaful has already formalized arrangements with The Royal Bank of Scotland, a commercial bank listed at the local stock exchanges. We are also in the process of finalizing arrangement with six more banks. We have a team of more than 300 takaful consultants operating through eleven branches at Karachi (Clifton and Hyderi) Lahore, Faisalabd. Islamabad, Hyderabad, Abbotabad, Rawalpindi, Gujrat, Kharian.
Product array
We have developed three branded products, which have been designed keeping in view the needs of different age groups. The names themselves give fairly good idea of the features and all are investment linked takaful plans. All of these suites best for the participants desire to grow savings and get financial protection along with Shariah compliance. Under the first plan Salamti participants decide quantum of regular contribution subject to minimum amount. These amounts are used for the purchase of investment units and takaful.
The second plan carries a brand name of Sukoon offers takaful along with accumulation of funds for retirement. You have to pay only for fix period of 10 or 15 years and plan shall continued upto retirement age of your choice; 60, 65 or 70 . It pays sum cover along with investment amount in participants account available at the time of retirement. The third plan called Samar accumulates fund for the education/ marriage of the participant's child and at the same time provide protection to the family. In case of earlier death of participant, contribution amount is payable by WAQF on behalf of deceased participant and investment account shall continue to grow. In addition an amount equal to annual contribution shall also be payable to family as pension for remaining term of plan.