ISLAMABAD: The SECP Commissioner Insurance, Aamir Khan, emphasized the significant transition of Pakistan’s financial system towards Shariah compliance. This shift, aligned with the cultural and religious values of the people, is expected to provide a significant boost to Takaful in Pakistan, as indicated by the recent decision of the Federal Shariah Court of Pakistan.

Khan was speaking at the 6th Annual IIAL Conference 2023, organized by the Islamic Insurance Association of London (IIAL). During his online keynote address, Mr. Khan pointed out the increasing potential for Islamic financial systems, citing the growth of Islamic assets in Pakistan. Khan further highlighted the flourishing Takaful segment, generating a total revenue of PKR 62 billion, representing an 11% growth over the previous year.

Mr. Khan outlined the five-year strategic plan proposed by the SECP for the insurance sector in Pakistan, with the aim of raising the insurance penetration rate from 0.87% to 1.5% of the GDP. In the Takaful sector, the goal is to increase its contribution to 30% of the total insurance sector. A key focus of this plan is digital transformation, aiming to target a digital distribution channel market share exceeding 5%.

Pointing out challenges faced by the Takaful sector, Mr. Khan highlighted several issues, including the need for re-takaful support due to the transition towards the Islamic financial system, insufficient underwriting expertise, the impact of climate change, and limited awareness.

In conclusion, Mr. Khan emphasized that addressing these challenges requires knowledge sharing. He proposed collaboration between the London market, renowned for insurance and reinsurance expertise, and the Takaful sector in Pakistan, facilitated by SECP. Such collaboration, he believes, can lead to the transfer of knowledge, supporting Takaful companies in developing underwriting capacity for specialized and emerging risks through innovative product solutions.