Although the license for PruLife UK’s products has already been approved by the Insurance Commission, specific details of the products it plans to offer have yet to be fleshed out.

MANILA, Philippines – Our Muslim brothers and sisters will soon have access to a Sharia-compliant or Islamic law-compliant insurance policy.

PruLife UK has obtained the first Takaful license in the Philippines, allowing the company to offer Islamic insurance by next year, targeting the country’s 7 million Muslim population.

“We expect to launch the product in the first quarter of 2025. Of course, it is subject to regulatory approval and so on… but tentatively, I think early next year, we will actually roll out the Takaful product,” Sanjay, PruLife UK CEO Chakrabarty told reporters on Monday 4 November.

Takaful provides Muslims with a financial safety net — although this is quite different from the way a traditional insurance policy works, as its main feature is that it works on the principle of “mutual support”.

In traditional insurance policies, the agreement is between the customer and the company — where the customer pays a premium to be covered by the policy for a certain period of time. The insurance company will then use the premiums to invest in financial products or investments, which are not necessarily Sharia compliant.

Most traditional insurance policies are interest bearing ie it is not allowed for Muslims.

Meanwhile, in Takaful plansmembers contribute to a common fund. This essentially covers all contributing members to the fund, and the accumulated money is invested in Sharia-compliant businesses.

All contributors to the Takaful fund are covered in case something happens. Meanwhile, payables are also distributed equally among the members.

Specific products will be released soon

While the license for PruLife UK’s products has already been approved by the Insurance Commission, specific details of the products it plans to offer have yet to be fleshed out. Chakrabarty noted, however, that their first products will focus on savings and protection.

“They’re going to sort of respond to simple needs of people … (like) being able to find a small body of funds when they can send the kids to education or if something bad happens to the breadwinner, then the insurance company steps in to support the family,” he said.

PruLife UK has yet to price its premiums, but Chakrabarty said it plans to offer it at an affordable price as it still tries to break into the market.

“You’re trying to break into a community that has traditionally been underserved or even underserved, and financial literacy is poor … affordability is also a question mark. So you have to take all these factors into account so that you get simple, very simple, easy to understand, intuitive products at (a) very affordable prices,” Chakrabarty said.

PruLife UK has recognized that financial literacy is one of the challenges they will face once the product is launched. However, Chakrabarty assured that they have plans to address them.

Overall, insurance penetration in the Philippines is still quite low, but the company relies on working with local governments to introduce the Takaful product to the market.

“If we do our job right, if we set up the products right, then at some point we expect that to start contributing to the profitability of PruLife UK,” Chakrabarty said.

“But it’s hard for me to sit here today and say when that will happen,” he added. “But I’m very confident that it will play a role – an important role – in PruLife UK’s business strategy going forward.” – Rappler.com