Pakistan’s Salaam Family Takaful is banking on a newly-introduced custodianship feature in its life insurance policies to win the trust of more investors and draw them toward the Shariah compliant insurance brand, which has relied on innovation to grow its revenue multifold since 2018.
“This custodianship feature will provide further comfort to the institutional investors in our corporate investment solutions,” Nayyar Hussain, a senior executive director at Salaam Takaful, told IFN Investor. “The idea is to promote a Know-Your-Operator culture, versus the commonly required Know-Your-Customer.”
The Salaam group announced in February 2025 that it has appointed the CDC, or Central Depository Company, of Pakistan to be custodian for the policies issued by Salaam Family Takaful, its life insurance unit that was founded in 2022.
Prior to that, the CDC had only been responsible for guaranteeing the settlement of all trades executed electronically on the Pakistan Stock Exchange.
“This custodianship is not a requirement in Pakistan, but obviously if a company voluntarily adopts it as a best practice, it will give more trust to the policyholders, actually, that their money is under the custody of independent institutional custody,” Nayyar said.
Such unique approaches and innovation were what helped Salaam Takaful’s revenue grow from less than PKR150 million (US$534,931) in 2017 to around PKR5 billion (US$17.8 million) now, Nayyar said.
The collaboration between the CDC and Salaam Family Takaful — which has been awarded Pakistan’s only digital insurance license that enables it to offer and operate life insurance policies in full electronic mode — also safeguards the Shariah model of profit-sharing with both the policyholders and investors of the company, said Nayyar.
“We have two sources of funds: one is the policyholders’ premiums, which I call contributions, and sponsors’ money, which resides in shareholders’ funds. We are investing 100% of the contributions into Islamic money market funds. The sponsors’ money is invested into Islamic banks and Islamic TDRs [term deposit receipts], that is Sukuk.”
With the CDC backstopping Salaam’s life insurance customers, institutional investors would also find greater assurance dealing with the brand, Nayyar said.
“When you deal with corporate clients, they are more financially savvy … more risk averse,” Nayyar said. Such investors were typically used to “working with mutual funds, where their money is managed by a trustee,” and would appreciate Salaam’s alliance with CDC and additional safeguards for money that did not directly belong to the group.
Operating for around two quarters now, Salaam Family Takaful generated revenues of about PKR300 million (US$1.07 million) in its first quarter ended the 31st December 2024.
While that is small compared with Salaam Takaful’s revenue, the Family Takaful business is, nevertheless, significant, watched by investors across the company’s other revenue streams that include policies for engineering, marine, fire, motor, health and agriculture, Nayyar said.
“Because of our digital model, we have been successful in reducing our acquisition cost significantly compared with other insurance companies in Pakistan.”
As a result, Nayyar said, Salaam Family Takaful operates at less than 5% of cost, versus the near 100% cost allowed by law, enabling its policyholders to see breakeven in profit-and-loss on “day one” while other insurers in Pakistan may require seven to eight years to achieve something similar.
