Interview with Mr Naim Anwar — Managing Director & CEO, Crescent Star Insurance Limited
Mr Naim Anwar experience spreads over 30 years of various exposures within Pakistan and outside Pakistan out of which 23 years have been in insurance in Pakistan. His insurance career spreads over various roles from a selling agent to the CEO level where he works now. In the process, he has vast experience and exposure of Sales & Operations including Underwriting, Claims, Re Insurance, Accounts and Financial matters and corporate affairs. Currently, his career in insurance has enriched with the addition of diversification, which includes food franchise business/technology company and luxury retail operations which have now become part of the CSI Group of Companies, which he head. Before joining the Crescent Star Insurance Ltd, he worked as Executive Director in Adamjee Insurance Ltd and as a Deputy Managing Director at PICIC Insurance Ltd.
PAGE: HOW WOULD YOU COMMENT ON THE INSURANCE SECTOR OF PAKISTAN?
NAIM ANWAR: Insurance sector in Pakistan while being one of the major segments of the financial markets needs much more recognition as a financial institution. The penetration of insurance in Pakistan is one of the lowest in the world and currently at 0.80% as against 4.5% in neighboring India and much lower as compared to many countries of the world.
Individual coverage of insurance related to an individual in person needs a long way to go for which the insurance sector needs to offer challenging products in line with the international market and the insurance user needs to realize the need of the various covers related to a person’s individual life and activities.
Mostly the segment looking for insurance cover in Pakistan is the corporate world, which also relies on the borrowing from lenders who require the debt to be covered for insurance. With a large population of 200 million, the scope of health insurance in Pakistan is untapped and need of the time. With the trend of the younger population moving towards working of both genders the literacy rate is growing and so is the spending power of the middle class, which can give the insurance sector a new market opening based on new selling trends reaching the masses through technology and alternate distribution channels as opposed to the traditional sales model through insurance agents.
PAGE: DO YOU THINK THERE IS DIRE NEED TO INTRODUCE NEW PRODUCTS IN INSURANCE SECTOR OF PAKISTAN?
NAIM ANWAR: Yes, Pakistan badly needs introduction of new products which are very commonly offered in international markets and Pakistan needs to have more creativity by the insurance companies and needs favorable assistance and backing of the regulator to develop these new products.
PAGE: HOW WOULD YOU COMMENT ON THE COMPETITION IN THE INSURANCE SECTOR OF PAKISTAN?
NAIM ANWAR: Serious and meaningful attention to competition in insurance sector in Pakistan is the need of the time. Pakistan market has always been shared by three large companies in the sector, which used to hold 85% of the market share till a few years ago. The smaller companies have recently taken bold steps to challenge this monopolistic approach and the market share of these large three companies has recently reduced to 60%.
Banking sector has played a negative role over years by having very non transparent policies with unfair criteria of enlisting insurance companies on their panel of approved companies in sheer violation of Insurance Ordinance.
There is no standard criteria, which all banks follow for enlisting and neither banks are transparent enough to put their criteria of enlistment on their websites or announce these for public consumption. Upon recent complaints to Competition Commission of Pakistan to look into this serious violation, a thin success has been made by the CCP taking up this matter and looking into the complaints. The regulator needs to look into this major issue being faced by the insurance companies who meet all required criteria of re-insurance and capacity certificates issued by the regulator and who hold valid license and meet all regulatory requirements and yet the banks for reasons best known to them and for protection of vested interests do not offer transparent competition. It is also a matter of serious concern that most major banks in Pakistan have their own subsidiary insurance companies, which are supported by the banks.
PAGE: YOUR VIEWS ON PROGRESS OF TAKAFUL IN PAKISTAN:
NAIM ANWAR: Takaful progress in Pakistan has been very low and most Takaful companies operating in this market have failed to deliver and facing difficulties. While the market demand for Takaful is there and a need of the time, the limitations faced by Takaful Operators in acceptance of the policies and the difficult process and paper work required for Takaful as opposed to conventional insurance has seriously hampered the operations of Takaful companies who also face Re Takaful capacity issues offered to Pakistan market.
Recently the regulator has allowed conventional companies to establish Takaful windows and most conventional companies have recently started these window operations but the success or failure still has to be seen.
PAGE: WHAT ARE YOUR VIEWS FOR THE NEW ENTRANTS?
NAIM ANWAR: There are already enough insurance companies in Pakistan to cater the need in the market, however, many of them are dormant and would need restructuring. Recently Crescent Star Insurance Ltd a 60 years well reputed company went into a massive restructuring and raised its paid up capital from Rs121 million to current capital of Rs827 million with efforts for merger and acquisition of companies needing desperate plans to pool resources together.
Regulator’s assistance in looking at areas which can assist mergers and acquisition to save these companies from liquidation and winding up and get a new life will be a welcome gesture, which insurance industry badly required. The sector’s growth will have a major boost if the regulator moves forward to provide legislative backing by bringing in line Rule 35 related to payment of premium as in countries like India.
Collection and bad debts is a major concern blocking the growth of insurance in Pakistan due to the fact that the legislation does not give the necessary backing required even after the focus group agreed and recommended the change in the rule but some reason or the other the amendment of the rule is still in doldrums.