Shahzaib Khanzada interviewed Pervaiz Ahmed, the director and chief executive officer of the Pak-Qatar family Takaful Limited.
Pak-Qatar Family Takaful Limited is the pioneer of the Takaful family in Pakistan. The company is regarded as a technology-driven shariah-compliant company providing need-based and cost-effective Takaful solutions in Pakistan.
SK: Ten months ago, your company was new and your plans were aggressive, and I had spoken to you back then about how realistic those plans were, keeping the situation of the country in view. What difference have you observed over the last 10 months?
PA: When I first spoke to you 10 months back, we had only just received a license and our company was in its launching phase. We had divided our expansion plans into two parts. Firstly, we thought of developing a company with a complete product range and one that is strong operationally, which means making your own house and order.
The second stage was to go into the market in front of the people, and to present an image that was consistent with the Takaful. The operational phase was very challenging, and we were supposed to do some expansion in the second phase. It was critical at that point in time that we should go out in the market and we did not know what kind of response we were going to receive. Generally when we made plans, we thought we were going to have 4,000 to 5,000 consultants over a short period of time, say three to four years. It generally looked optimistic because no other company had been able to achieve that mark.
Alhamdolillah over this short period of time, we have managed to launch a range of products, both for corporate customers and for individuals and now, we are present in all the major cities of Pakistan. We have opened up our offices in 13 cities so far and we are expanding very rapidly; we even have an office in Azad Jammu and Kashmir (AJK). Almost 800 consultants are working for us, we have trained and developed almost 12,000 to 13,000 people, and on the business side, a significant number of corporate clients have come onboard and are doing business with us and similarly a good number of customers have come onboard too.
By the end of the partial year on the 31st of December 2008, we had done business worth Rs 31 million, which is a very good number for a new company like ours. So now we have a full range of products in place, we consider ourselves one of the major players in the market, comparing our product line with any other established player that has been in the market for 12 years or more.
SK: When the country’s situation is such that, there is an inflationary scenario, an economic slowdown, the disposable income of the people has been hurt badly and they have to think twice even before purchasing the basic necessities; there can be two strategies of doing business. One is to carry out test marketing and taking things slowly. Your company on the other hand penetrated very rapidly and the numbers are all very surprising. What was the reason behind that? How is company so aggressive even during these hard times that Pakistan is going through?
PA: Generally, it happens that when you are strategising, there are always two parts to it. Firstly, the situation at the macro level, then there is the sector that you are focusing upon. Usually a lot of companies make the mistake of moving very cautiously in the desired sector just by considering the situation at the macro level. When we were launching this company, we analysed the market closely and found that the market has a lot of potential. The insurance penetration is very low and Islamic finance is needed in the market, so we should go out in the market regardless of the macro level situation.
Because there are a lot of gaps in the market, during this period the whole world including Pakistan was going through a financial and economic crunch. But some of the companies entered the telecommunications industry and they ended up doing pretty well, so basically we were focused on that sector. The nature of our business is actually long term. For example, when we sign a contract with someone; we always sign it for 15 to 20 years. Secondly, expansion in downtime is always easy because you can get quality human resource from the market, and you get the resources at good prices. Then, expansion does not take much.
I think it was a very focused approach, and we are still focused because of the response that we have received in a short period of time. There is only 0.3 percent penetration of the life insurance sector in Pakistan, which can go up to three to four percent. I believe that even if 10 to 15 more companies come, and work here, they will still have opportunities to make inroads.
SK: What you said happens to be a blessing in disguise because we keep saying that Pakistan’s economic boom started in 2002. If the Takaful had entered the market at that time, it would have progressed a lot better. But you think it is the other way around? If there is an economic slowdown, does it offer benefits of its own too?
PA: Yes of course, it has its own benefits. Pakistan did have an economic boom starting from 2002, but the situation of economic uncertainty in Pakistan has continued since the bomb blast in 1998, and the foreign ministers did not consider this a certain situation. I have been working with some foreign investment companies, and I know that we have now learnt how to live and survive in an environment that is uncertain. So if you are living in an uncertain environment, you learn to live and adapt with that, and it is true that this has some of its own advantages. If you are planning any expansion during a slowdown, and if you are doing it wisely, you can make a fortune out of it.
SK: I was going through your company profile and found it very interesting because all the people related to insurance, whether conventional or Takaful, have started talking a lot about the technologies that the bigger companies are investing in this field.
Others say that when they carry out cost benefit analysis, they don’t think that they is any need to invest in technology. You have actually mentioned in the first line of your company’s description that you want to be a technology-driven, Shariah-compliant company. Why is it so important that you have mentioned it in the first line?
PA: Technology is the heart of all the strategies that we are implementing. We are working in the service industry and generally in the service industry, customers’ satisfaction is considered to be the top most priority. Unfortunately, Pakistan is not a service-oriented country, as compared to the Western countries. So there are two elements to providing satisfactory services to the customers.
Firstly, it is the attitude of the people who are working, and number two is basically the tools. Both of these things are very important. For example, if you have the attitude but you lack the tools, you will not be able to survive in the industry. Similarly, if you have the tools but you lack the attitude, you would not be successful then either.
We have invested millions in our business technology, we brought up our business system from Malaysia, which gave us an edge to offer products and services that even the established insurance companies could not offer in the market. We believe that operation efficiency can only be achieved through technology. We wish to work at a low cost to pass on more benefit to the customers. Customer benefit is directly related to our cost, and without technology this is not possible.
SK: Your strategy seems to work well. Best of luck for your plans and thank you for your time.
PA: You are welcome.