Microfinance on the Horizon

PAKISTAN: Pak-Qatar Family Takaful is planning to establish the first Islamic microfinance bank in the country. CEO Parvez Ahmed said the new bank will give preference to small and medium-scale businesses.

Ahmed also said it would introduce Takaful and Family Takaful products for the provision of short-term loans based on Islamic principles for the lower income group. In addition, Pak-Qatar Family Takaful plans to invest PKR500 million (US$6 million) in the country to expand its Family Takaful business and other related projects.
The decision, according to Ahmed, was taken, in view of the robust growth potential of the Takaful business in the country.

Diversifying for growth

KOREA: The trading debut of Samsung Life Insurance (Samsung Life) shares is expected to boost the insurance sector’s presence on the stock market. In view of this, an official from the Korea Institute of Finance suggested that Samsung Life should maximize the benefits of listing, by going beyond the domestic insurance market to aggressively target the insurance industry in emerging countries as well as the Takaful market.

Second chance

UK: The country’s first Takaful firm, Principle Insurance Holdings, which is also the parent company of Salaam Halal, has agreed to sell its subsidiaries — Principle Insurance Company and Principle Marketing Services — to its third largest shareholder, Kuwait-based Al Salam Group Holding.

The transaction could result in the re-launch of Salaam Halal, which began trading in July 2008 with a motor insurance offering aimed at the 1.6 million Muslims living in the UK. The insurer stopped accepting new business in November last year after failing to raise sufficient funds to continue trading.

Modernization required

MALAYSIA: The country needs to update its motor insurance and Takaful markets by adopting a risk-based system to reflect current circumstances, according to Insurance Services Malaysia (ISM).

According to ISM, the existing system implemented in the 1970s is “no longer sustainable and is misaligned” with developments in road safety, consumer protection and automotive sectors.

Double target plan

MALAYSIA: HSBC Amanah Takaful (Malaysia) will continue to double its contribution of premiums this year.

The objective of the move is to reach an internal target of contributing 20% to HSBC Amanah Malaysia’s revenue by 2011.

Its executive director and CEO Zainudin Ishak said: “Our strategy is to maximize our bancassurance model, which has already seen new premiums grow more than double in 2009.”

Premium growth

UAE: SALAMA - Islamic Arab Insurance Company (SALAMA) posted a 28% growth in premiums in the first-quarter of 2010 to reach AED526 million (US$143 million).

Unique selling point

GLOBAL: The unique mutuality principle of Takaful is the key to promoting new business in light of increasing competition from traditional insurers and a difficult operational environment, according to an Islamic financial services consultant.

According to Ernst & Young director of Islamic financial services group Ashar Nazim, this important element is being overlooked as Takaful operators are concentrating more on price competition and market share.

“In this specialized market segment, customers need to know more about the mutuality concept rather than price,” said Nazim.

Upcoming law

MALAYSIA: Perbadanan Insurans Deposit Malaysia (PIDM) will develop a legislation to introduce an explicit insurance compensation scheme for Takaful and insurance policyholders, according to the finance ministry.

The ministry said the move will enable Takaful and insurance policyholders to enjoy a similar level of consumer protection provided by PIDM for depositors in commercial and Islamic banks.

Financial coverage

PAKISTAN: Prime Islami Life Insurance has signed a MoU with ICB Islamic Bank to provide a death and disability coverage to personal finance customers of the bank.

It was initially incorporated under the name of Prime Life Insurance Company in July 2000 and was later converted to an Islamic firm in April 2002.

Profit up

UAE: Abu Dhabi National Takaful Company has more than tripled its first-quarter net profit to AED1.4 million (US$1.2 million). Its technical profit climbed 18% to AED10.3 million (US$2.8 million), while total cash and cash equivalent rose 3.6% to AED144 million (US$39 million).