Pakistan’s Salaam Takaful completed its parametric-based crop Takaful pilot project and signed several partnership agreements in 2022. ISFI spoke to CEO and Managing Director Rizwan Hussein about the challenges of offering crop Takaful coverage as well as the operator’s plans for 2023.
“Being an agricultural economy in Pakistan with 24-25% of our GDP based on agriculture, it is very important for us that we provide the social protection and the coverage to the farmers who are the backbone of our society,” Rizwan shared.
The penetration for both Islamic banking and Takaful in the agricultural sector in Pakistan is lacking, with the sector being persistently underserved. Rizwan cites this as the reason why Salaam Takaful entered into the crop Takaful segment.
While the agricultural sector plays a vital role in the Pakistani economy, offering crop-based coverage is not without its challenges.
The logistics of reaching farmers as well as the affordability of Takaful products are major hurdles operators face. Rizwan estimates that there are seven to eight million subsistence farmers in Pakistan who cannot afford crop coverage.
Rizwan opines that establishing an ecosystem with stakeholders who can create value to the farmers is vital in order to offer products.
“We need to collaborate because we can’t do everything ourselves. Let’s take the example of weather modeling, of actuarial modeling for the pricing, the reinsurers, the seed partners, the fertilizer providers,” Rizwan added.
As such, it has partnered with over 20 entities to create this ecosystem with multiple domestic and international partnerships in the pipeline for 2023.
Salaam Takaful is in the midst of forming an alliance with a competitor insurer. Expected to be signed in one month, the partnership will see them offer each other’s products to their own customers, Rizwan told ISFI.
Also in its pipeline is the launch of a digital life Takaful company in about two months’ time, Rizwan shared. The TakaTech company will offer a number of products including savings products, annuities, pension schemes and endowment policies.