EFU Life Assurance office is seen in Karachi.The Pakistan’s largest private insurance group will offer Shariah-compliant insurance products through its general and life units.
Pakistan’s largest private insurance group will offer Shariah-compliant insurance products, or takaful, through its general and life units, adding further momentum to government efforts to expand the Islamic finance industry.
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 13.9bn rupees ($140.8mn) 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% 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.
