Salaam Takaful Limited’s Rizwan Hussain Discusses Pakistan Flooding, Its Impact on Farmers and What the Industry Can Do to Help

Devastating flooding in Pakistan has led two insurance institutions to partner to improve climate resilience for the country’s farmers. The CEO of Salaam Takaful Limited shares his take.
By: | November 11, 2022

Climate change’s devastating reach continues to decimate people’s homes, lives and livelihoods.

As was widely reported this past summer, Pakistan has faced unprecedented levels of flooding triggered by torrential monsoon rains. Hundreds of thousands of homes were damaged or destroyed. A reported 1,500 people lost their lives. More than half a million residents have been left homeless.

Farmers lost their fields, their yields and their livestock — a devastating blow, considering that “Pakistan’s agriculture sector plays a central role in the economy as it contributes 18.9% to GDP and absorbs 42.3% of the labor force,” the country’s finance division reports.

That’s where Salaam Takaful Limited steps in. In August of this year, Salaam Takaful, an Islamic insurance company, partnered with Syngenta Pakistan to help transform the country’s agriculture sector.

As part of that partnership, both parties aim to make Pakistan’s ag business more robust and climate resilient.

Rizwan Hussain, managing director and CEO of Salaam Takaful Limited, sat down with Risk & Insurance to discuss that partnership, climate’s growing impact and what takaful insurance is all about.

Risk & Insurance: How did you find yourself working in insurance and what has led you to the role you have today?

Rizwan Hussain: I have been associated with the corporate world for the past three decades.

I started off at the bottom of the chain, like any fresh graduate would. At that tender age, people belonging to the banking and insurance sector fascinated me; that’s why I decided to pursue my career in the financial industry.

Once I learned the ropes, I started to realize that there is so much to be done.

The lack of innovation, age-old ways of doing business, very mundane offerings, always made me think that there is a huge opportunity to revolutionize the industry, which eventually will increase financial inclusion and help the cause of increased insurance penetration in Pakistan, not only helping the economy but also providing the real value for money to each and every policyholder.

With this interest driving me, eventually, I and a few like-minded friends acquired a near-death Islamic insurance company and turned it around, which is now a case study for the whole industry.

I assumed the role of MD and CEO and have been working on the vision of becoming a role model for the corporate world by creating and providing better value through innovation, backed by robust technology, while generating a meaningful social impact.

I am happy with the progress we have made so far, however, I still feel that there is a lot to be achieved and many more frontiers to be conquered.

R&I: The term “takaful insurance” is not something we often hear in the United States. Would you mind educating our audience on what this means?

RH: Essentially, takaful is Islamic insurance. The way banking is segregated between conventional banking and Islamic banking, similarly, insurance also has two alternates, the conventional insurance that is normal and prevalent in the U.S. and Islamic insurance, called “takaful,” which is more prevalent in Muslim-populated countries.

However, takaful is a comparatively new concept, and that is why market share-wise, it is still quite nascent. Nevertheless, there is a requirement for Islamic financial solutions, and therefore takaful came into existence.

The principal differences, to name a few, would be that takaful is based on teachings of Islam and adheres to Sharia guidelines, in addition to the regular audits.

The concept is based on general brotherhood, and a pool of funds is created to save people from losses. The management of this pool of funds is undertaken by the takaful operator.

So there is an obvious segregation of the organization and the pool funds.

Conventionally, the premium fund becomes the asset of the insurance company. In takaful, the premiums, which are called “contributions,” constitute a separate pool, and the organization has no ownership rights on these funds.

At the end of the day, there are many operational differences. However, for customers or policyholders, the value that is offered in the form of loss protection is the same.

R&I: Our readership primarily comes from the United States, and our understanding of the flooding Pakistan faced in recent months is only as deep as news reports can go. From your perspective, what is the impact of these floods truly like? How is it pushing the industry to find solutions?

RH: The floods in Pakistan this year have been one of the most devastating floods in recent times. It has affected the lives of more than 33 million people, destroyed 2.3 million homes, damaged 14,000 kilometers of roads and 435 bridges; 13,000 people are injured and more than 1,700 people have lost their lives.

Thousands of people have lost their only source of livelihood. The displaced people are facing more and more issues with each day passing, including health hazards and malnutrition.

The ripple effects of such a catastrophic event have resulted in an irrecoverable loss to the economy and industries of Pakistan. All stakeholders are looking towards solutions for risk mitigation, with the insurance and takaful sector sharing the spotlight as the providers of risk protection.

Unprecedented calamities require unprecedented measures, and that is what all stakeholders need to devise.

R&I: Recently, your company entered into a partnership with Syngenta Pakistan. What is the goal of this partnership? 

RH: Salaam Takaful has been trying to create the much-needed ecosystem to make farmers in Pakistan resilient against climate change.

In the quest of making the ecosystem, Salaam Takaful is partnering with stakeholders in the value chain. Syngenta has done commendable work for the farmers in Pakistan and has become a major stakeholder.

With our aim to include farmers into the folds of financial coverage benefits and help them in becoming resilient, partnering with Syngenta was a no-brainer.

We are working on a comprehensive ecosystem on that front, which will not only educate and assist farmers well before the impacts of any catastrophe, but also help them in increasing their yield, and will also protect them from uncertain financial losses.

We have recently been inducted as one of the signatories of the Principles for Sustainable Insurance, and we are rigorously following the 17th United Nations Sustainable Development Goal, “Partnerships for the Goals.”

Salaam Takaful, hand in hand with its strategic partner Syngenta, will continue to preach [to] farmers about the problems they will potentially face due to climate change in the forthcoming years, and will also provide them with the tools and measures they must take to diminish the potential problems.

We will not only provide them coverage against weather-based catastrophes but also equip them with data-based forecasting to remain prepared against situations like these.

R&I: How have the flooding events in Pakistan made this partnership vital for the future of the industry?

RH: Salaam Takaful Limited believes in the philosophy of collaboration. We understood that in order to provide a robust solution to the farmers, all the relevant stakeholders must get to a platform to solve the problems on a macro level.

The recent floods just reiterate the fact that climate change is real, and its impacts could be further catastrophic. It gives us a reality check and creates an urgency to take the right steps to save the agriculture economy of Pakistan.

Historically, as well, the farmers have never been that well off. Since their livelihood is dependent on agriculture, the recent floods have confirmed their vulnerability. They have lost their homes, animals and lands, hence their livelihoods, and have become financially weaker.

We need to play a crucial role in providing them with a lifeline to recover from this impact.

Fortunately, all the major parties are on one page, and we are now being contacted by multiple stakeholders including the government, development banks, NGOs, agri companies and food companies.

R&I: What are some of the other key trends and challenges you see facing the industry?

RH: The biggest challenge for the insurance and takaful industry in Pakistan is the lack of financial literacy.

The belief system in insurance and takaful in Pakistan is still infant [and] backed by less than 1% penetration in terms of GDP contribution. Which is why, at this point in time, all our efforts are to first educate people about how insurance and takaful can solve their problems.

The public at large needs to be made aware of all the benefits that come with being insured.

The industry requires a revamp of how it operates; the urban population requires better solutions, innovative solutions, with less hassles and more convenience. We are trying to create benchmarks in that direction, and by far, this research-based requirement has turned out to be quite true. Our progressive business numbers and growth stats speak for themselves.

R&I: A final question for you: Looking at your accomplishments, both personal and professional, which are you most proud of and why?

RH: My perspective on this is quite unorthodox.

Rather than looking at what I have done so far, I prefer to look at what more I can do to create social and environmental impact.

This keeps me going and drives me to accomplish more. This is how I have considered every situation in life, and I am proud of this perspective.

That’s the reason a car has small rearview and full front view; this sends a message that we should always look forward.

God has made this universe infinite, and there is a hidden message in it: to strive for more, to explore more and to serve more. So far, it has worked, and I believe this will help me serve more in this limited life. &

Autumn Demberger is the content strategist at Risk & Insurance®. She can be reached at [email protected]

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