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Leveraging BancaTakaful as a Key Growth Channel. Challenges and Opportunities Rohail Alikhan, DCEO Pak-Qatar General Takaful. Pak-Qatar General Takaful. Part of PQT Group offering both Life & General Takaful Cover Combined paid up capital of Rs. 840 million

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leveraging bancatakaful as a key growth channel

Leveraging BancaTakaful as a Key Growth Channel

Challenges and Opportunities

Rohail Alikhan, DCEO

Pak-Qatar General Takaful

pak qatar general takaful
Pak-Qatar General Takaful
  • Part of PQT Group offering both Life & General Takaful Cover
  • Combined paid up capital of Rs. 840 million
  • Sponsors are Qatari Islamic Banks, Islamic Insurance Companies, & Investment Mgmt Firms
  • Just our top three sponsor banks alone have a combined shareholder equity of over QR 14 billion (USD 3.8 billion) and total assets under management of over QR 95 billion (USD 26.12 billion), making us the strongest General insurance company in Pakistan
  • A-Rated Shariah-compliant reinsurance companies
  • Registered and supervised by the Securities & Exchange Commission of Pakistan (SECP)
  • An independent Shariah Supervisory Board, chaired by Mufti Muhammad Taqi Usmani, certifies all Takaful products and business operations for Shari’ah compliance
  • State-of-the-art business technology from Malaysia and in SAP ERP solutions complemented by specialized human resources
takaful is a growing opportunity
Takaful is a Growing Opportunity
  • Muslim countries represent 23% of emerging market GDP
    • 11% of Insurance premiums (USD45bn) written in these countries
  • 2004-2007 Takaful growth 25%-30% p.a. vs. 10% for Conventional
  • Contributions have increased from USD 1.7B in 2004 to USD 3.4B in 2007
  • Largest Global markets are Saudi Arabia and Malaysia
  • Insurance penetration in Muslim countries is 1.3% vs. 2.8% in emerging markets.
  • In 2007, potential market for Takaful was estimated at USD35-45bn
financial crisis is an opportunity to establish bancatakaful as a force
Financial Crisis is an Opportunity to Establish BancaTakaful as a Force
  • The financial crisis has severely impacted financial institutions and the ensuing recession has severely affected growth forecasts in all sectors and regions
  • Takaful operators that successfully manage their business risks and think “out of the box” will be well-placed to take advantage of emerging opportunities
  • BancaTakaful is one of these opportunities.
  • BancaTakaful is defined as the distribution of Takaful products by Banks (Normally Islamic Banks)
advantages for the bank

Advantages for the Bank

The Bank sees BancaTakaful as a way of creating a new revenue flow and its extensive branch network is efficiently used.

Diversifies its business activities

Covers all customers’ needs – whether financial or protection related.

The distribution costs are marginal since it is the Bank’s existing employees who sell the products.

advantages for the takaful company

Advantages for the Takaful Company

Extends its client base due to Bank’s extensive network.

Provides access to clients who were otherwise difficult to reach

Varies the distribution channels.

The Takaful Company often benefits from the well-established brand image and service reliability that people attribute to Banks.

Lower cost compared to the cost of the traditional sales representatives.

advantages for the customers

Advantages for the Customers

The client enjoys greater access to all financial services from the Bank including protection – “One Stop Shop” or “Islamic Financial Supermarket”

The client benefits from cheaper Takaful products than through traditional channels.

Contribution payment methods are simplified since they are collected directly from Bank accounts.

opportunities

Opportunities

Insurance penetration rate is extremely low in the region, hence with simple and comprehensive Takaful products, a value proposition can be created and higher level of penetration can be achieved.

By the value added proposition achieved through BancaTakaful more low to medium income groups can also be brought under the umbrella of protection.

challenges

Challenges

Segmentation of the Client Base.

The traditional "mass market" BancaTakaful

Private BancaTakaful (aimed at High-net worth individuals)

Corporate BancaTakaful and SMEs

Products should flow through the banks network easily.

Responding to the customers needs rather than offering off the shelf products.

Risk Assessment, Training of the Bank staff and Remuneration.

pqgtcl proposition
PQGTCL Proposition
  • We facilitate our Islamic Banking partners to provide seamless banking and Takaful services to their clients through our complete range of products.
  • We offer specialized discounted rates for our customized BancaTakaful products
  • Depending on the particular model we are following, we offer attractive commission rates for Takaful products cross-sold through the banks.
direct bancatakaful model
Direct BancaTakaful Model
  • We offer Takaful support to Islamic banks at discounted rates.
  • The banks pay the contributions directly to us.
  • The rates offered to the banks under this model will be net of commission.
  • The banks merge our specific Takaful product into their own product to produce a BancaTakaful product.
  • The banks offer BancaTakaful products to their customers apparently “free of cost”.
  • Simplified products such as Personal Accident, Home Shelter Takaful, etc may be included under this model.
indirect bancatakaful model
Indirect BancaTakaful Model
  • We enter into a cooperation agreement with our Islamic Banking partners
  • While selling their banking products, the bank offers to arrange Takaful coverage to their customers from us.
  • The bank then refers the client to us or obtains and forwards their details to us.
  • We offer our products to the Bank’s clients on specially reduced rates.
  • Contribution is either paid directly to us or through our partner bank.
  • We pay the bank a commission at a pre- agreed rate.
  • This mechanism works well for complex Takaful products such as EAR, CAR, Machinery Breakdown, etc
products ideal for personal financing
Products Ideal for Personal Financing
  • Home Musharakah:
  • Fire & Allied Perils Takaful: covers property against the risk of fire and other perils such as lightning, explosion, riot & strike, earthquake, atmospheric disturbances, burglary, etc.
  • Personal Accident Takaful: covers risks of accidental death, total disablement, temporary total and temporary partial disablement; 24hrs, worldwide cover.
  • Car Ijarah:
  • Private Car/Commercial Comprehensive Takaful: provides comprehensive coverage to the vehicle against risk such as fire, hail, theft, snatching, whilst in transit, 3rd party death or bodily injury, 3rd party property damage, emergency medical expenses and any accidental damage to the vehicle.
  • Personal Accident Takaful
personal financing takaful products cont d
…Personal Financing Takaful Products (Cont’d)
  • Hajj & Umrah Financing Scheme
  • Hajj & Umrah Travel Takaful: covers risks of accidental death, total disablement, temporary and total partial disablement, hospitalization expenses due to accident or illness, emergency medical evacuation expenses, expenses for repatriation of mortal remains, loss of baggage and loss of passport while travelling for the purpose of performing Hajj and Umrah.
products ideal for deposit accounts
Products Ideal for Deposit Accounts
  • Shop Owners Takaful:covers building, contents, stock and cash against the risks of fire, explosion, riot and strike, earthquake, rain water damage, flooding, vehicle impact damage, loss of rent, burglary and armed hold up, etc
  • Personal Accident Takaful
  • Home Shelter Takaful
products ideal for project financing
Products Ideal for Project Financing
  • Marine Cargo Takaful: covers machinery, equipment or material against the risks during transit either at sea, in air or land.
  • Marine Advance Consequential Loss Takaful: covers the consequential loss resulting from loss or damage to the machinery, equipment or material during transit.
  • Contractor’s All Risk Takaful: covers contract works against risks such as fire, earthquake, malicious damage, storm, flooding, lack of skill, 3rd party liability, etc.
  • Erection All Risks Takaful:covers erection works against risks such as fire, earthquake, malicious damage, storm, flooding, lack of skill, 3rd party liability.
  • Principal’s Advance Consequential Loss Takaful: covers consequential loss resulting from losses covered under CAR and EAR policies.
products ideal for fixed assets financing
Products Ideal For Fixed Assets Financing
  • Marine Cargo Takaful
  • EAR
  • Fire & Allied Perils Takaful
  • Machinery Breakdown Takaful:covers machinery against the losses resulting from risks such as defects in casting and material, faulty design, short circuit, lack of skill, etc.
products ideal for corporate financing
Products Ideal for Corporate Financing
  • Our Complete Product Range Can Be Offered!
slide19
The Way ForwardTo move beyond product-oriented cross-selling to customer-focused cross-buying requires a holistic approach to BancaTakaful. The right customers (as identified by customer segmentation) need to be provided with products which are attractive (to both the customer and the BancaTakaful provider) through convenient distribution channels. Reinforced by accurate and usable data, the organization will use its processes and rewards, to create a culture and behavior which result in a customer-focused and profitable institution. These components of a comprehensive BancaTakaful program really do add up to many times the sum of its parts.
slide20
Jazaak Allaaho Khayran

(May Allaah Reward You)

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