PRU LIFE Insurance Corp. of UK Philippines (Pru Life UK) expects takaful or Islamic insurance to start gaining momentum in two to three years as companies take a cautious approach towards what is a relatively new market for most players.
“Actually, overseas, it usually takes two to three years. That’s the standard for not only for takaful but product development,” Pru Life UK Vice-President and Sustainability and Takaful Head Maricel Estavillo said at a media briefing on Tuesday.
“For now, at least for the life sector, we are the first [to offer a takaful product], and there’s a second insurer with a takaful window. And we feel like they’re also on a wait-and-see [stance],” she added.
The Insurance Commission (IC) last year issued takaful operator licenses to Pru Life UK and Etiqa Life and General Assurance Philippines, Inc.
Takaful is a type of Islamic insurance where members contribute a certain sum of money to a common pool to guarantee each other against loss or damage. It needs to be compliant with Shari’ah law, which prohibits riba (interest), al-maisir (gambling), and al-gharar (uncertainty) principles.
Instead of paying premiums, parties in a takaful arrangement agree to contribute to a pool or mutual fund from which claims are paid out of. A contract will specify the risks covered and the length of coverage.
These takaful pools or funds are managed and administered by a takaful operator that charges fees for sales, marketing, underwriting, and claims management.
In June, Pru Life UK launched its takaful product called PruTerm Lindungi.
Ms. Estavillo said they expect a shortfall as claims are likely to exceed the available funds for the product.
“It’s not a risk but it’s a real possibility, especially if you have a product that is very small. In terms of contributions or premium, it’s very small, and the benefit is P100,000. So, it’s really a mass game. You need to onboard a sufficient number of participants,” she said.
“So far, the take-up has been very encouraging, but of course, since this is a very new — not only a new product, but also it’s a new concept, new model as a whole — we need to continue investing in public education and awareness. So, at least for now, we’re focusing on marketing and selling the first product.”
For the first year of the product, the company will focus on educating both the public and its agents on takaful, she said, adding that they currently have almost 300 appointed takaful agents.
Ms. Estavillo cited a study commissioned by the insurer, which found that only 2.5 million out of the 7 million Filipino Muslims in the country can afford financial protection.
She added that there are limited Shari’ah-compliant investment options in the country. “But if you check the guidelines, it doesn’t prohibit a takaful window operator to also invest overseas.”
Pru Life UK booked a premium income of P48.15 billion and net profit of P3.72 billion in 2024, IC data showed. — A.M.C. Sy
