Apr 19 - 25, 2010

'Accident and health business' means effecting and carrying out contracts of insurance providing fixed pecuniary benefits or benefits in the nature of indemnity or a combination of both, against risks of the policy holder, according to the experts. Health Insurance is aimed at providing a protection cover against adverse health events, which include medical expenses and financial costs of treatment, medication and rehabilitation. The major constraints in the health insurance sector in Pakistan have been the lack of awareness, consumer behavior, and poor service efficiency of the insurance companies.

The government should increase its focus on mandatory health insurance by providing tax incentives and removing tax disincentives for the growth of this sector.

Pakistan is actually in a state of war. It is fighting a global war against terror on frontline position. With a health care spending of only 2 per cent of GDP, the health sector in Pakistan remains neglected, as it is insufficient to properly meet the health needs on a national scale. Unfortunately, Pakistan is now spending 0.5 to 0.6 percent of GDP on health, compared to India, which spends 4 to 5 percent of GDP on health and education. The government needs to increase coverage and payments for expensive healthcare such as hospitalization and medication. Catastrophic health insurance is being provided in Pakistan via the Rural Support Networks.

Insurance sector operations have two main categories: life insurance and non-life insurance. The growth of non-life insurance depends on industrial development. The country's insurance industry has shown exceptional performance during the last three years. The industry has been the greater beneficiary of the recent increased economic activities in the industrial and consumer finance sectors. In fiscal year 2007, it witnessed a stellar growth of 18.2 percent.

In the current fiscal year budget 2009-10, the government increased the health sector budget and pronounced a health insurance scheme. The government increased public spending for health to $16 per capita from $14 per capita. The increase is still considered as minimum by the World Health Organisation to deliver essential services. In the current fiscal year, over 50 percent of the allocations have been earmarked for the two programmes-the National Programme for Family Planning and Primary Health Care and the Expanded Programme for Immunisation.

Experts believe that comprehensive health insurance reforms would be meaningless without government's help, participation and interest, as majority of Pakistanis who need to be secured for health are in the informal sector. health insurance should cover the population for essential services through public financing. The government should adopt a locally-suited approach to increase public financing, as the existing health insurance programs are federally controlled and hence being outside of provincial-district accounting channels led to lack of ownership of these programs by the provinces. Concerted long-term action is needed to restructure policies, laws, institutions, norms and regulatory and oversight mechanisms in the health and related sectors in order to improve the health status of the general masses.

Insurance companies should tap the un-insured population in the country by educating the consumers about health insurance. The insurance firms need to focus on product innovation through use of technology and alternate distribution channel.

EFU is the leading insurance group in Pakistan providing a full range of insurance services including life, health and general insurance. In 1992, the Government of Pakistan opened up life insurance to the private sector and EFU Life Assurance Ltd was incorporated in 1992 as the first private sector life insurance company.

The third company in the EFU Group is Allianz EFU Health Insurance Ltd., which is dedicated to providing health insurance to individuals and corporations. It is a joint venture with Allianz of Germany, one of the largest insurance companies of the world. Allianz EFU Health is Pakistan's first specialized health insurance provider.

Pakistan actually needs a sound health care financing policy to address the key issues in the country's health sector. The government should announce incentives to enhance health care delivery and to provide social protection against routine and catastrophic health care expenses.

Pakistan direly needs qualified insurance experts for which the country lacks the institutes like UK Institute of Chartered Insurance that can develop professionally qualified people. Such institutes should offer degree courses in Insurance & Risk Management. Keeping in view the growing need for qualified insurance experts through the Universities within the country and abroad, the government should announce a policy for sending the students abroad for employment.

The government should take steps for establishing an autonomous institute to produce qualified insurance experts on the lines of UK Institute of Chartered Insurance. Insurance Association of Pakistan, Securities & Exchange Commission of Pakistan (SECP), Ministry of Commerce and Insurance Companies, students and teachers can play a significant role in flourishing the Insurance industry and developing human resources in the country.

The modern economists use the term 'human capital' for education, health and other human capacities that can raise productivity when increased. The analysis of investments in health and education is unified in human capital approach. The human capital approach focuses on the indirect ability of education and health to increase utility by increasing incomes. Investment in human capital formation means investment in education and health sectors. Only the educated, skilled and healthy people can make the best use of the enormous natural resources of a country. The better human capital equipped with education in science and technology can be instrumental in increased productively with modern technology in all economic sectors. This will enhance industrial productivity and increase exportable output of the country.

Human development provides a wide range of choices and opportunities to the people for employment, nutrition, education and health care. Sustainable growth and poverty reduction objectives are concomitantly linked to significant investment in human capital.

The good governance is essential for the development of human resources. It ensures the transparency, efficiency and rationality in the utilization of public funds and national resources, encourages growth of the private sector, promotes effective delivery of public services and helps establish the rule of law. Along with good governance, the people friendly policies, and sound macroeconomic management are also of immense importance in this context.