INDUCTING PROFESSIONALS IN INSURANCE BUSINESS

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)

Feb
22 - 28, 2010

Security and Exchange Commission of Pakistan has come into full swing to improve corporate governance in insurance business in the country. With fit and proper test, the regulator is planning to examine the qualification of top brasses of insurance companies and take actions against executives with raw qualifications.

The measure is obviously to improve conceptual skills in insurance policy designing and strategy making. Insurance sector of Pakistan has all but full of non-professionals from rank and file to top management, a fact that is assertively accepted by the people in the sector. Tinku Johnson, managing director and chief executive officer century insurance company, says insurance is not popular in the country because the people who deliver the services mostly do not undergo proper professional and academic insurance trainings. SECP has found the problem of low penetration of insurance in unsuitability of executives with the jobs.

Fit and proper tests are carried out in financial sectors all over the world to upgrade corporate governance. Stringent criterion is set for candidates of professional posts in developed economies, says Tinku Johnson during an interview. There is no such legislation in Pakistan that restricts entry of non-professionals in the insurance business, he adds. Few education institutions are offering insurance education in the country, leaving insurance companies with no choice except to recruit non-professionals. The gap left by the education institutions is filled by training workshops and seminars that to some extent keep insurance workforce abreast with the changes in the insurance field. Tinku thinks the efforts should be extended to promote insurance education. He is also the chairman of Karachi insurance institute that organizes workshops, seminars, symposia, and other certificate courses for insurance work force. The institute is affiliated with Pakistan insurance institute that also organizes training courses for people related to the insurance sector. In collaboration with University of Karachi, Pakistan insurance institute has recently launched post-graduate diploma in insurance.

One-year diploma, PGD in insurance has ten courses including property underwriting, marine, liability, and motor vehicle insurance, and is recognized by the companies. This programme is one of its kinds in Pakistan, and is a good starter with regard to producing knowledgeable insurance professionals. According to Tinku Jhonson, who is also council member in Pakistan insurance institute, the diploma and certificates are accepted in the insurance sector. As far as diploma is concerned, he says, marks are awarded 40 percent by the institute and 60 percent by the university. Karachi insurance institute is one of the four institutes operating in Lahore, Rawalpindi, and Peshawar, says the chairperson. The enrolment in diploma is low because of its recent introduction.

We will also start diploma programme from Karachi institute, he says. There is a dire need of knowledgeable insurance agents in the sector since professionals are in short supply. 'The supply sources of skilled human resources should be diversified.' Will this oversupply not create problems in job market? No, because the trained persons would replace the uneducated employees in the industry, who have an option to update themselves with the insurance dynamics, he answers. 'We need professionals to bring insurance sector of Pakistan at par with international standards.' Unfortunately, this is not the case right now. Local insurance market is full of non-professionals who have perfunctory knowledge of insurance and therefore emphasize on profit making more than on underwriting, he says adding more educational institutions should commence undergraduate and graduate programmes in insurance. 'I personally feel that insurance graduates, MBA elective in insurance, are not matching up with the requirements of insurance companies,' he criticizes. Only two educational institutions in Pakistan are offering degree programmes in insurance. Hailey College of Lahore has to see its first batch in insurance pass out. Let us see whether graduates from Lahore fill the knowledge gap in the insurance sector, he comments. He is not satisfied with the curricula in insurance degree programme. He says the absorption rate of insurance graduates in insurance companies is low. 'Nobody accepts them.' Corporate-academia link is weak. All stakeholders should be consulted before implementation of reforms in the industry, he observes. The need of reform is as important as the human resource development. He appreciates the recent measure by security and exchange commission of Pakistan, which sets criteria for executive cadre in insurance companies. The 'fit and proper' test is essential to filter out deterrents to good corporate governance in insurance companies. SECP has said that it will ensure qualified and competent insurance experts on the top management of insurance companies. The unqualified people are obstacle in the way of delivery of quality insurance services in accordance with the Insurance Ordinance 2000, says the regulator in a statement. When asked would 'fit and proper' crackdown limited to top level improve standards of insurance altogether, Tinku replies, 'it is a good step'.

Without licence or certification, not even an insurance agent is permitted in to insurance business in western countries, he says. Chartered insurance institute, UK is a world's famous insurance institute. There is also an institute in US of equal international acclamation. These institutes award professional designations, certifications, and fellowships. Chartered insurance institute awards fellowship of chartered insurance institute (FCII) to holders of Associateship of the chartered insurance institute (ACII). Their corroborations are unquestionable in insurance companies across the world.