| July 25
July 25 Pakistan's largest private insurance
group will offer sharia-compliant insurance products, or
takaful, through its general and life units, adding further
momentum to government efforts to expand the Islamic finance
Both EFU Life Assurance and EFU General Insurance
plan to open takaful windows, a practice which allows
firms to offer Islamic and conventional products side by side,
according to separate filings with the Karachi stock exchange.
An alternative to conventional insurance, takaful follows
religious guidelines including bans on interest and pure
monetary speculation and a prohibition on investing in
industries such as alcohol and gambling.
The plans come two months after regulators cleared the way
for conventional firms to offer Islamic products, part of
regulatory effort to increase insurance penetration in Pakistan,
which remains the third-lowest in Asia.
EFU General had 13.9 billion rupees ($140.8 million) in
written premiums in 2013, representing roughly a quarter of the
industry's total. EFU Life has a branch network of over 150
branches around the country.
Company officials declined to comment on their plans but a
source at one of the units said the takaful windows could be
operational in two to three months.
The entry of conventional players is expected to boost the
takaful sector, which holds an estimated 3 percent share of
Pakistan's total insurance market.
Last month, United Insurance said it planned to
enter the sector to provide takaful and retakaful products both
locally and overseas.
Pakistan first allowed the use of takaful windows in 2012,
but this prompted a legal challenge by Pakistan's five takaful
firms which claimed the rules put them at a disadvantage.
The dispute was settled in May after an agreement that
requires insurers to allocate 50 million rupees ($506,000) in
capital to their window operations, adding a capitalisation
requirement that was not in the original rules.
At the time, the Securities Commission said it had received
five applications for takaful windows and expected as many as
half of all conventional insurers in Pakistan to eventually
apply for a licence.
(Editing by Eric Meijer)