Director, Securities & Exchange Commission of Pakistan (SECP), Shoaib Soofi said that the requirement of minimum paid up capital for Islamic insurance business in Pakistan was very low as compared to India and other countries, adding SECP was actively working for providing protection to customers.
He was addressing a seminar on "Islamic Insurance in Pakistan" at Faisalabad Chamber of Commerce and Industry. He said that an insurer or applicant for registration as person authorised to carry on insurance business was required to meet the minimum capital requirements for life insurance business Rs 150 million and for non-life insurance business Rs 80 million.
Following additional requirements as specified in the Investment Policy of the Board of Investment, Government of Pakistan were also applicable on subsidiaries of foreign insurance companies: Foreign insurance companies are entitled to hold 51 percent shares and foreign companies are required to bring in minimum amount of $2 million in foreign exchange and raise an equivalent amount from the local market, he added.
Shoaib Soofi said that the subsidiaries of foreign insurance companies could operate in Pakistan only as a public company incorporated under the Companies Ordinance, 1984.
Accordingly, foreign insurance companies cannot operate as local branch or on service basis. Licensing requirements for subsidiaries of the foreign insurers and domestic insurers are the same.
Foreign insurers are given the same treatment in extending all the facilities as enjoyed by local companies. Registered insurer cannot carry on activities other than in connection with or for the purposes of its insurance business.
All objectives of the company are defined in the company's articles of association, which are duly approved by the SECP before incorporation of the company.
Every insurer shall deposit with the State Bank of Pakistan, the higher of ten million rupees and 10 percent of the insurer's paid-up capital, as statutory deposit under section 29 of the Insurance Ordinance.
This deposit can either be in cash or in approved securities estimated at the market value of the securities on the day of deposit or partly in cash and partly in approved securities so estimated, he added.
He explained that separate companies are required to carry on life and non-life insurance business in Pakistan ie composite insurance is not allowed. Once the certificate of registration is granted to an insurer for conducting insurance business, the life insurer is allowed to underwrite all four classes of life insurance business given in sub-section (1) of section 4 and non-life insurer is allowed to underwrite all classes of business mentioned in sub-section (3) of section 4 of the Insurance Ordinance, 2000.
However, the following classes of business have been declared as "restricted classes" under Rule 3 of the Insurance Rules, 2002, for which separate approval is required to be obtained from the SECP to underwrite for Life Insurance (i) Pension fund business; and (ii) Accident and health business; for non-life insurance (i) Motor third party compulsory business; (ii) Workers' compensation business; (iii) Accident and health business; and (iv) Proportional treaty business; and (v) Non-proportional treaty business.
Shoaib Soofi said that the Islamic Insurance business in Pakistan taking gradually grip and a Qatar's company also applied for a license for general insurance company, while SECP had received various enquiries in this regard.
Deputy Managing Director, Pak-Kuwait Takaful Company Limited, NK Hussan said that Takaful was a Shariah compliant alternative to conventional insurance.
The word Takaful is derived from the Arabic verb 'Kafala' meaning to guarantee to help or to take care of someone's needs. Takaful emerged an ancient practice on the Arabian peninsula of mutual co-operation and assistance among members of a tribe, she added.
Pak-Kuwait Takaful Company Limited will also apply for a license of Islamic Life Insurance separately.
Mian Mohammad Hanif, President, Faisalabad Chamber of Commerce and Industry, Mian Muhammad Idrees former president FCCI, Shahid Usman, Deputy General Manager, Pak-Kuwait Takaful Company Limited and Muzzamal Sultan also addressed the seminar.
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