Insurance Journal (4th Quarter 2021)

Guest Contribution
safeguard the interests of its
borrowers to whom it advances
money.
In my opinion, assigning per party
single risk limits to Takaful operators
is an illogical measure undertaken by
banks when all Takaful companies
have a per risk limit assigned by their
Re-takaful treaty companies, which
are not only expert but also having
rich knowledge in the subject. The Retakaful
operators assign per party
single limit after analyzing various
parameters such as capital, solvency,
financial strength, gross premium
income etc. of respective takaful
operators.
Under the umbrella of the treaty, the
client of bank is safe as their interest is
fully covered because when the
operator covers a risk, it retains a
small portion of that risk and the
balance is passed on to its treaty. This
is done with a view to spread the risk
so that when a loss occurs, the
operator may pay less from its own
resources and the major portion of loss
is recovered from its treaty. Hence in
the presence of re-takaful treaty
arrangements there is no need to do a
further exercise of fixing the total
exposure limit. The primary criteria
for assigning bank limit after the
treaty arrangements should be the
speedy settlement of claim and good
track record of the Takaful company
because these are of the topmost
performance and without it, banks
cannot safeguard the interests of their
borrowers.
It is worth mentioning that Takaful
companies have made a lot of efforts
to resolve the bank limit issue but has
gone in vain. Hence, the government
should look into the matter and
incorporate some provisions in the
regulations to remove such types of
obstacles so that Shariah based
welfare system in the country would
flourish without any interference from
other entities.
The Takaful is a service industry
providing security to all traders,
industrialists and individuals.
Therefore, the importance of
education is most important within
this profession. Education makes the
staff of the takaful company more
efficient, skillful, resourceful and
knowledgeable –necessary to perform
CORRECTION
better service as the subject of takaful
is a normal human being and the
object is to provide financial
protection to put the person back in the
same financial position as he was
before the loss occurrence.
It would not be out of place to mention
here that when the availability of
skilled professionals is ceased, the
growth of that industry also comes to a
halt. Pakistani takaful industry needs
more educational and training
institutes to impart education and
training to their personnel to keep
Islamic insurance floating. The
backing of the government in the form
of funds on education particularly for
the development of takaful will
strengthen the industry to provide
welfare to more and more people.
Last but not least, there is more
required in order for the welfare of the
people in the country. It is up to the
government to come forward and take
initiative towards its vision to develop
Pakistan into a true welfare state in
line with the State of Madina.
In July, August, September 2021 issue of
Insurance Journal, while reporting the results
of IAP Elections 2021-22, the photo of New
Chairman (2021-22) was wrongly published.
The photo of Mr. AZFAR ARSHAD, the new
chairman 2021-22 is published in this issue of
Insurance Journal. Insurance Journal sincerely
regrets the mistake.
Mr. AZFAR ARSHAD
Chairman IAP - 2021-22
Insurance Journal October, November, December 2021
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