INSURANCE SECTOR IN PAKISTAN
A REVIEW OF INSURANCE SECTOR AND HRM / HRD ASPECTS
PROF. DR. KHAWAJA AMJAD SAEED,
Hailey College of Banking & Finance,
University of the Punjab,
Allama Iqbal Campus,
Apr 14 - 20, 2008
As of November 07, 2007 there were 637 companies which were listed on the Karachi Stock Exchange with a total market capitalization of Rs. 4121 billion (66 billion $). This figure has registered an increase now and our Karachi Stock Market is of approximately US$ 72 billion. Out of this, financial sector constitutes 41% of the total market capitalization of Karachi Stock Exchange. However, the Insurance Sector is a small one and needs immediate attention for its growth, development and rapid expansion to meet the challenges of 21st Century for accelerating socio-economic growth of Pakistan with an emphasis on wider prosperity.
Insurance Sector has registered a very slow growth in the history of Pakistan. Based on our research, the following conclusions emerge:
1) Listed insurance sector on Karachi Stock Exchange in terms of companies is only 4.4%.
2) Out of 637 listed companies, only 29 relates to insurance sector.
3) From the birth of Pakistan till now we have added only 29 listed companies- giving us a ratio of less than 0.5 per company per year.
4) Turnover for 10 months (January ñ October 2007) on the Karachi Stock market was only 1.55% of the total turnover.
5) Share of insurance sector on listed companies on Karachi Stock Exchange is only 3.83% in respect of Market Capitalization.
6) Share of insurance in GDP of Pakistan is only 1.80%. Ten percentage companies shares are listed below par. Therefore, these are sick. They need revival.
7) In the case of life insurance there is a vast scope. State Life Insurance Corporation of Pakistan should be immediately privatized. Their Mission Statement should be reviewed and revisited and on war-footing Insurance Policy of a vibrant nature should be developed so that Insurance Sector starts serving the economy of the country. As of today, excluding Group Insurance, there are hardly 2.5 million people in a total population on 166 million who enjoy the life insurance cover.
This percentage requires to be given a quantum jump so that its expansion is seen for the benefit of the community. In this respect, we plan to develop a draft for Insurance Policy for submission to the democratic Government of Pakistan so that they give a serious attention to this critical area and also develop insurance (Conventional) and Takaful (Islamic Insurance).
HRM / HRD
One of the biggest problems in Pakistan has been that no attention has been given in the past to produce qualified insurance experts through the Universities. No autonomous institute with statutory recognition exists in the country. It is high time that the profession is restructured on the lines of UK Institute of Chartered Insurance and Statutory recognition is given to such an Institute for serving the noble cause of developing professionally qualified people in the country. Moreover, it is pertinent to note that the Father of the Nation, Quaid-e-Azam Muhammad Ali Jinnah on April 18, 1948 while delivering his address of welcome to Edward College, Peshawar had stated as under:
"I entirely Ö.. That instead of turning more clerks and government servants, your college is now offering suitable subjects or students, which would enable them to take their place in commerce, trade, industry, banking and insurance business. It should be the aim of our colleges to produce first class experts in
Agriculture, Zoology, Engineering, Medicine and their specialized subjects. Only thus shall we be able to come to grip with the problems that are now facing us in the task of raising the standard of living, especially of the common man."
The misfortune is that no University responded to the clarion call of the Father of the Nation as mentioned above. By the grace of Allah and with the support of University of the Punjab and Insurance Association of Pakistan, Hailey College of Banking & Finance whose name is going to be changed as Hailey College of Banking, Insurance & Finance commenced education for producing duly qualified students to serve the Insurance Industry in the year 2005. Currently, the above College is offering the following degree courses:
I) Four Years regular BBA Hons (Insurance & Risk Management).
II) Two Years regular MBA Morning Program (Insurance & Risk Management).
III) Two Years regular Executive MBA Evening Program (Insurance & Risk Management).
The courses for the above programs were developed in consultation with stakeholders - in particular with the Insurance Association of Pakistan. An excellent teaching is continuing and the first batch of MBA will be shortly available. There is a growing need for these graduates within the country and in the Middle East for which preparation is being made to send the students abroad for employment. Our slogan is "preparing locally for global jobs". Various courses being offered in the scheme of four years BBA Hons Program include:
* 5th Constituent College of the University of the Punjab, Lahore.
"Functional English (Composition & Grammar)", "Principles of Accounting", "Introduction to Business", "Money Banking & Finance", "Principles of Insurance & Risk Management", "Functional English" (Essay Writing, Precise Writing etc.), "Fundamentals of Statistics". Insurance Accounting & Finance". Mathematics & Basic Calculus". Islamic Culture and Ideology of Pakistan", "Business Correspondence & Report Writing", "Economics", "Property & Pecuniary Insurance", "Taxation", "Information Technology & its Application to Insurance", "Mercantile and Corporate Law", "Principles of Marketing", "Principles of Management", "Cost & Managerial Accounting", "Marine Insurance", "Life Insurance", "Economy of Pakistan", "Research Methodology", "Financial Analysis", "Data Base Management", "Structure of Pakistan Insurance Industry", "Motor Insurance", "Life Insurance - II", "Risk Management-I", "Human Resource Management", "Insurance Law & Practice", "Regulation of Insurance in Pakistan", "Liability Insurance", "Claims Management", "Risk Management-II", "Workshop", Underwriting Management", "Disability & Health Insurance", "Reinsurance", "Insurance Marketing", and "Benefits of Insurance for the country",
The above course structure has been broken into eight semesters.
Scheme of Study relating to Two Years MBA (Insurance & Risk Management) degree program includes the following:
"Financial Accounting", "Principles of Management", "Economics", "Quantitative Method & Techniques", "Principles of Insurance & Risk Management", "IT for Insurance Professionals", "Insurance Law & Contract", "Insurance Marketing", "Human Resource Management", "Risk Management", "Financial Analysis & Investments", "Life and Health Insurance", "Insurance Marketing", "Human Resource Management", "Mercantile & Corporate Laws", "Economy of Pakistan", "Property & Pecuniary Insurance", "Reinsurance: Principles and Practice", "Motor Insurance", and "Liability Insurance".
It is hoped that the stakeholders will rise to the occasion and the Government of Pakistan, Securities & Exchange Commission of Pakistan and other regulatory bodies, Ministry of Commerce, Insurance Companies, Insured Persons, Students, Teachers and other representatives of civil society will make an enriched contribution in strengthening the frontier of HRM / HRD so that the yawning gap which existed in the past to serve the insurance sector is minimized and there is a real flourish of Insurance Sector to serve the economy of the country in a befitting manner. Earlier this is done the better.