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More awareness of insurance/takaful industry considered necessary

More awareness of insurance/takaful industry considered necessary

Interview with Dr. Syed Arif Hussain — a seasoned insurance professional

Profile:

Dr. Syed Arif Hussain is currently associated with East West Insurance Company Limited-Widow Takaful Operations. He has brought his expertise in management, resource development, marketing and execution of business strategies to East West Insurance Company Limited-Widow Takaful Operations.

His professional experience is spread over 22 years at progressive senior level positions and he has the experience of underwriting, reinsurance, claims management and marketing with the State Life Insurance Corporation of Pakistan and Dawood Family Takaful Limited. He headed Takaful Pakistan Limited, a non-life Takaful Company, and Excel Insurance Company Limited as Chief Executive Officer. His expertise include Life, Health and project related Insurances/Takaful schemes. He has extensive experience in restructuring, insurance operations and automation. He holds M.B.B.S. and Master’s Degree in Business Administration. He has also attended a number of Insurance/Takaful and management related workshops and conferences conducted locally and internationally.

East West Insurance Company Limited was registered in 1983 by the Controller of Insurance, Government of Pakistan with the business objective to underwrite all classes of general insurance businesses and was licensed by Securities and Exchange Commission of Pakistan (SECP) as per ‘Takaful Rules 2012’ of Window Takaful Operations to conduct Takaful business. Takaful is the Shariah-compliant alternative to conventional insurance schemes. East West Insurance Company Limited has acquired IFS rating ‘A+’ by Pakistan Credit Rating Agency (PACRA). East West Insurance Company Limited is a bonafide member of the Insurance Association of Pakistan and is also listed with the Pakistan Stock Exchange. The balance sheet of East West Insurance Company Limited reflects the financial strength of the company with sizeable paid-up capital of Rs 610 million and reserves exceeding Rs 400 million. The highly liquid investment of the company exceeds Rs 1.3 billion.

PAGE had interaction with Dr. Syed Arif Hussain regarding the insurance sector of Pakistan. The excerpts are as follows:

In the year 2016 the growth of Non-Life insurance premium was 10 percent and Life insurance premium was 12 percent. Gross premium of 07 Life insurance companies was Rs. 172 billion which was 0.58 percent of GDP, while the premium of 37 Non-Life insurance companies was Rs. 73 billion which was 0.25 percent of GDP. Whereas Gross Written Contribution of two Family Takaful Operators (Islamic Life Insurance companies) was Rs. 9 billion which was 0.03 percent of GDP, while Gross written Contribution of three Takaful operators (Islamic General insurance companies) was Rs. 1 billion which was 0.01 percent of GDP. In this way in the year 2016 total premium was Rs. 255 billion which was 0.86 percent of GDP. We have gone a long way ahead currently since the insurance sector is making strides with success.

The estimated 210 million population of Pakistan represents a huge market for Takaful and Insurance industry. To tap the huge market, introduction of creative products is the need of the time. Some of the gaps in the market include Crop coverage and Livestock coverage or Professional indemnity for engineers and doctors. Needless to say it is an uphill task and perhaps greater effort is needed to create awareness among the users. Given that wealth management (like salary saving plan, pension plan) is another aspect of Insurance/Takaful, the product plate may be expanded to tweak the existing model. With the current model, perhaps micro insurance/Takaful is a far cry, but some program lending may be designed to work it out. Especially without a welfare or social security net, the need is immense with the lower middle class.

 

A large population of the country is shying away from insurance due to religious reasons and equally large population is staying away from Insurance/Takaful due to lack of understanding, low literacy rate and low income per capita. However Takaful provides with an alternate mechanism for taking care of some of the basic needs of fellow beings in the time of need, but the other two factors directly relate to economic and political situation of the country.

We have to educate the agents of the industry first and then through media, NGOs, civil societies try to convince at the community level to give understanding of importance of insurance/Takaful. The industry may offer to provide the coverage to low income household staff in times of medical emergencies and health. However, the poor are in an invisible bonded labor as they are willing to work for barely sustainable salaries in the hope of getting bailed out when going gets tough.

The potential of insurance growth in Pakistan is too much in all areas of insurance classes because the penetration of insurance is negligible i. e. less than 0.9 percent of GDP. The progress of insurance industry is directly related with the progress of economy of the country. Political uncertainty and law & order situation badly affects the growth of economy which ultimately affects the insurance business. To attract the foreign investors, it is important to create a peaceful business environment and offer them some attractive packages for investment like Composite Insurance/Takaful Companies License (allow them to do business of Life and Non-Life under one umbrella). Moreover, tax rebate plan may also attract the investors, for this a road map may be designed by the government and project it through overseas seminars.

Although there is a lot more to be done in order to provide benefits of insurance to a common man, Life Insurance companies are doing their best and they are performing well with steady growth in business. Since insurance penetration in GDP of Pakistan has always been on the lower side as compared to other developing countries, real quantum and benefit of insurance is yet to achieve. General insurance sector, although performing well, but lacks attractive and steady growth due to lack of interest and awareness of its importance particularly in SMEs. Similarly general Takaful companies have to exert more efforts in order to compete with the conventional insurance and at the same time achieve sustainable growth in business. It is government’s responsibility to introduce regulations on compulsory Insurance/Takaful to protect corporate sector as well as the common man.

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