Page 43 - Digital Edition SIRC Supplement

MARKET REPORT – PAKISTAN

In the livestock sector, State Bank of Pakistan, along with communication but has also increased the profit margins.
the SECP, has launched livestock insurance scheme which is This development poses some of the challenges from the
a new window opening for insurance companies to employ
their expertise in. perspective of insurance industry in Pakistan. Companies
Energy need to be robust technologically and readily available to
There is a growing trend of development in the energy sector both the commercial and non-commercial customers. If these
with the recent initiatives of the government and foreign expectations are met and satisfied, insurance industry shall
investors in using alternative sources of energy. Foreign also reap the benefits of economies of scale.
investors are being attracted due to high profit margin and Regulatory changes and role of reinsurers
development potential in this sector. Insurance Ordinance 2000 was promulgated, and Insurance
Act 1938 repealed. This brought minimum capital requirement
Recently, Pakistan and China signed 51 Memorandums of for non-life players.
Understanding relating to diverse aspects of bilateral relations,
including the Pakistan China Economic Corridor. As per Insurance Association Pakistan, the total assets of 28
Terrorism non-life insurance companies operating in the market and are
Unfortunately, in the past 10 years, Pakistan has been under members of IAP works out to PKR137 billion against retained
the threat of terrorism more than any other country in the premium of PKR27 Billion in 2014. This is a very healthy sign
region. This has adversely effected foreign investments and as each unit premium retained is supported by 5 units of an
the economy. Insurance has stepped in by providing separate asset. This shows good financial strength of the market which
terrorism covers to the industrial risks in order to provide is supported by local reinsurer Pakistan Reinsurance Company
peace of mind and security. This type of insurance business Ltd, and world renowned European, Middle East, Far East and
is booming and provides the premium volumes needed for Asia Pacific reinsurance market players.
insurance success.
Takaful Pakistan insurance market has enjoyed these market support
Takaful Operations were introduced in 2005 allowing only in good and bad days, and is indebted to these markets for
dedicated takaful companies to operate. However, this did not reinsurance support and technical guidance in risk management.
produce the expected results as takaful business accounted for Future of the market
less than 5% of total market premium. As identified in earlier paragraphs there is huge potential and
opportunities for insurance market which are untapped. The key
The regulator feeling the need of the market players, to success for Insurance companies need rigorous campaigns
introduced new Takaful Rules in 2012 and allowed window to increase the awareness among general public and invest
operations for conventional insurers. in personal lines more so that the popularity of Insurance is
increased and thus its growth.
However, the takaful companies legally challenged
the above, claiming this will give an unfair advantage to Regulations must be established to monitor market more
conventional insurers, which resulted in a delay. efficiently. And companies need to create innovative products
more quickly so that their customers are retained and satisfied.
As issue has been settled, many conventional insurers have
started Window Takaful operations, including EFU. This will For EFU General, this means focusing more closely on the
help growth in takaful business. markets and customer segments where we have competitive
Technology edge, and where we can offer superior value propositions to
Technology in the last 10 years has changed both the social our customers.
and economic scenarios. Increasing use of mobile devices,
smart phones and availability of internet has not only improved Mr Saifuddin N. Zoomkawala is Chairman of EFU General Insurance,
and Allianz-EFU Health Assurance. He is also Director at EFU Life
Assurance.
EFU General is parent company of EFU Group with her siblings EFU
Life Assurance and Allianz-EFU Health Insurance.

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