KARACHI: Pakistan’s insurance industry may be tiny, but something dramatic is about to take place that will perhaps change the industry’s landscape forever.
A giant private equity fund from Switzerland is going to either acquire or invest heavily in at least three insurance companies operating in Pakistan during the next three to eight months.
Speaking to a select group of journalists on Wednesday, Securities and Exchange Commission of Pakistan (SECP) Insurance Commissioner Asif Arif said the insurance industry is going to receive capital inflows amounting to “billions of rupees” in coming months.
Refusing to share the name of the private equity fund, he said it is eyeing the largely untapped insurance markets in Pakistan and six other countries.
“Our economy is huge, but the total insurance penetration is only 0.9% of the gross domestic product (GDP). It’s a massively unexplored market. However, use of technology is opening new avenues in the insurance industry, paving the way for rapid growth in penetration levels in coming years,” he said.
Talking about micro-insurance, livestock insurance and crop insurance, he said these new segments of insurance are going to be within the reach of ordinary people because of new, innovative approaches being adopted by insurers.
For instance, Arif said life insurance products worth Rs20 billion are being sold through banking channels now, which is roughly one-fifth of total insurance premiums. “Agency (sales) network is not enough anymore if a company wants to survive in today’s competitive environment,” he said, emphasising that alternative distribution channels are necessary to increase insurance penetration in the country.
In this regard, he cited the example of a telecom company that recently offered micro-insurance coverage on the basis of a minimum mobile phone balance of Rs200. “Over 840,000 subscribers took that policy in just four months,” he said.
Regulators’ conference
The SECP is going to host the second South Asian Association for Regional Cooperation (Saarc) Insurance Regulators’ Meet and International Conference on April 14-16 in Karachi, Arif said.
About 500 delegates from international insurance regulators, insurers, reinsurers, brokers, donors and bankers from Saarc as well as other countries are expected to attend the conference, he said.
Guests include World Bank’s actuary and team leader insurance, Craig Thorburn. “Other than the nine Saarc countries, delegates from Germany, United Kingdom, Bahrain, United Arab Emirates and Kenya are also coming. Seventeen Indian delegates will also take part in the conference,” he noted.
