How to develop insurance culture
The insurance industry seems to have been slow to adopt the new ways as compared to other financial services in Pakistan
By ATIQUE AHMED CHISHTI
Sep 10 - 16, 2001
This is an age of competition. New ideas and knowledge are developing rapidly. Competitors miss no chance to update them with the changes taking place in their relevant fields. It is evident from the history that only those nations achieved progress and development that gave top priority to adopt new ways and keep pace with the changes.
The insurance industry seems to have been slow to adopt the new ways as compared to other financial services in Pakistan. It is one of the largest revenue growing areas in the country. Bringing about changes in line with the global requirements would help the industry develop with great speed.
The following are suggestions for the development of the insurance industry in Pakistan.
• New technologies have changed the way of doing business. With the advent of Internet, a new era of e-insurance has begun. In order to speed up the journey of doing business, we have to get benefit by adopting this new way. The situation demands to take an advantage of e-insurance by setting up new rules and regulations allowing insurance companies to sell their products through the Internet.
• New risks arise with the new innovations. One of the main problems confronted by computers is a computer virus. In case a virus enters into a computer, it spreads quickly and hits the computer by destroying files and damaging data. The people since the birth of the computer virus started seeking ways of protecting the data from destroying. There is a need to introduce a new insurance policy covering losses arising from the damage to data caused by viruses.
• The media both electronic and printed plays an important role to keep people abreast of the current events taking place across the world. The Insurance Journal issued quarterly from Karachi covers the news of the insurance companies operating in Pakistan. But the magazine seems to cover not much activities being made by the local insurance companies. The Insurance Journal needs to be made a big source of information of the industry. This is only possible from the contribution of all the insurance companies in the form of continuous press release on their achievement to the Insurance Journal. Through this magazine they would also have an opportunity to project their image to the business community .
• Rating is the standard measure used to determine financial strength and service performance of a company showing an ability to meet its obligations to the customers. This indicates where a company stands in today's competitive marketplace. That is why rating has been increasingly an important factor for a customer in making decision to purchase insurance. It is the need of the hour to create an independent credit rating agency for insurance companies to be classified and rated according to their financial position and service performance.
• The world economy has been slow. The market climate is extremely competitive. This situation has had an adverse effect on all the segments. As a result, merger and acquisition is being increasingly adopted to survive in a competitive environment. In Pakistan smaller local insurance companies facing difficulties could save themselves from going out of the business through mergers and acquisitions. This step would help the smaller insurance companies not only to remain alive but also enable them to improve their presence in the market effectively.
• Insurance companies keep sending their employees abroad for reinsurance training. They spend a substantial amount on training and in return only a few people take advantage from the training. It would be better to organize conferences and seminars on reinsurance in Pakistan in collaboration with a foreign reinsurance company. Thus we will have an opportunity to give reinsurance training to the people at large with minimum expenses and maximum results.
It is said that the fast growing changes will completely change the way we live. Without updating our insurance industry in line with the current changes, we would not be able to meet the demands of the competitive environment successfully. It is not out of mention to say that the government seems unable to fulfil our ambitions. It is the insurance industry that has to take steps to strengthen it, enabling to face the challenges of the twenty first century.