According to sources, the primary law i.e. the Insurance Ordinance, 2000 does recognise the business of takaful, however, a need was felt to further elaborate the same for its effective regulation. Accordingly, the Draft Insurance Bill, 2016 entails the procedure for authorisation of takaful/window takaful operators along with a description of the major conditions that may be imposed on authorised takaful/window takaful operators.
Under the Draft Insurance Bill, 2016, no person other than a registered insurer duly authorised by the Commission to transact takaful business shall be eligible to transact takaful business in Pakistan. An insurer registered with transact life insurance business shall be eligible to transact family takaful business and an insurer registered with transact non-life insurance business shall be eligible to transact general takaful.
A takaful or a window takaful operator shall appoint a Shariah advisor or Shariah board in accordance with such regulations as may be prescribed by the Commission; appoint a Shariah compliance auditor in accordance with such regulations as may be prescribed by the Commission; appoint a Shariah compliance officer in accordance with such regulations as may be prescribed by the Commission; and comply with such other requirements as may be prescribed by the Commission for the purposes of this section.
In addition to the conditions under section 54, a Window Takaful Operator shall report its assets, liabilities, revenues and expenses separately for each segment of its Conventional business and Takaful business; appoint a whole time head of window takaful operations who shall possess relevant experience and knowledge as may be prescribed by the Commission and shall not be associated with the conventional insurance operations, in any manner and comply with such other requirements as may be prescribed by the Commission for the purposes of this section.
The Commission may by order suspend or revoke the authorisation of a takaful or a window takaful operator either wholly or in respect of a class of business, as the case may be, if it is satisfied that the takaful or the window takaful operator is carrying on its operations in a manner which is not approved by its Shariah advisor or Shariah board. Secondly, the takaful or the window takaful operator has not commenced business within twelve months after being authorised. Thirdly, the takaful or the window takaful operator has ceased to carry on Takaful business. Fourthly, the takaful or the window takaful operator is carrying on its takaful business in a manner likely to be detrimental to the interests of its policyholders. Fifthly, the takaful or the window takaful operator has failed to affect adequate re-
takaful arrangements. Sixthly, the takaful or the window takaful operator is contravening or has contravened the provisions of the Act and the regulations made thereunder. Seventhly, the takaful or the window takaful operator has furnished false, misleading or inaccurate information or has concealed or failed to disclose material facts in its application for authorisation. Eighthly, the takaful or the window takaful operator has failed to comply with such other requirements as may be prescribed by the Commission for the purposes of this section and it is in the public interest to cancel the authorization, draft law added.
Copyright Business Recorder, 2017