Excerpts from an exclusive interview with Saifuddin Zoomkawala, Managing Director, EFU General

SHABBIR H. KAZMI, Special Correspondent
Mar 19 - 25, 2007

PAGE: How much premium was collected by insurance companies under motor insurance in 2005?

Saifuddin Zoomkawala: With the overall improvement in the economic fundamentals and changing perception about Pakistan substantial investment is being made. Insurance companies not only hedge the risk but also help in mobilization of capital. However, our main business remains hedging the risk. You may be aware that more than four dozen general insurance companies are operating in Pakistan. During 2005 they collected an aggregate gross premium of Rs 8,867 million. Out of this Rs 8,669 million were collected by 29 companies belonging to the private sector and Rs 198 million were collected by National Insurance Corporation, a public sector insurance company.

PAGE: What was EFU General's share?

Zoomkawala: Despite very tough competition EFU General enjoys significant market share in motor insurance business. It collected Rs 3,440 million gross premium during 2005, which translates into 40% share in the total premium. As stated earlier 29 companies from the private sector are in the motor insurance business. Therefore, attaining 40% market share is a remarkable performance of the EFU team. Here, I would like to add that during 2005, two of EFU branches individually collected one billion rupees gross premium, with motor insurance contributing substantially.

PAGE: What was motor insurance share in total collected premium?

Zoomkawala: EFU provides insurance cover to businesses undertaking manufacturing and/or offering services. In our advertisements we say that textile industry is our major client. However, motor insurance has also emerged as a major segment. This could be gauged from the fact that during 2005 premium collected from motor insurance was 38% of the total gross premium collected by the EFU General.

PAGE: What was the level of claims?

Zoomkawala: I always say, "EFU General does not sell insurance, it pays claim". Every company is ready to offer insurance cover. To solicit more and more business companies often charge a rate, which is unrealistic. The result is when the claims are filed the best efforts are made to reject these on any pretext. As against at EFU rates are not only competitive but also sufficient to meet each and every legitimate and realistic claim. At an average net claim ratio to net premium in motor insurance ranges from 65 to 70 percent, depending on car lifting/snatching.

PAGE: Has the tariff come down with the increase in number of vehicles insured?

Zoomkawala: My reply is in two parts. First, with the growing awareness about insurance the number of people acquiring insurance out of their free will is increasing. Second, with the increase in auto /leasing/financing motor insurance has become almost mandatory. Now, bulk of the vehicles is sold under leasing and/or auto financing, which require mandatory insurance of the vehicle. Therefore, rates have come down, which also enables more people to get comprehensive cover of their vehicles.