(February 24, 2020)
President Pakistan Businessmen and Intellectuals Forum (PBIF), President All Karachi Industrial Alliance (AKIA), Senior Vice Chairman of the Businessmen Panel of FPCCI and former provincial minister, Mian Zahid Hussain on Monday said the importance of insurance in national development cannot be overemphasized amid current depressing economic scenario.
The importance of insurance has increased manifold, therefore, the insurance sector needs to brace for the new challenges, he said.
Mian Zahid Hussain said that all the important sectors of the economy including industry and agriculture are going down, defaults and foreclosures have become order of the day while 1.5 million people have lost jobs renewing important of life, livestock, crop and all forms of general insurance.
Speaking at a seminar regarding the insurance industry, the veteran business leader said that masses, businessmen and farmers are facing heavy losses and insurance is the best tool to mitigate their losses.
The former minister noted that despite the risks the insurance penetration is very low, the insurance premium is just 0.7 percent of the GDP in Pakistan while it is 30 percent of the GDP in the US.
The insurance premium is 3.5 percent of the GDP in India, 0.9 percent in Bangladesh and 1.2 percent in Sri Lanka meaning thereby that we are well below the regional average.
He said that a major chunk of funds earned by the local industry finds its way in the coffers of major insurance companies located in Singapore, Malaysia, Germany and other countries which is disturbing.
Despite the potential of Rs800 billion, this sector is almost stagnant at Rs80 billion due to lack of initiative on the part of some companies, lax attitude of the regulator and lacklustre support by the government.
Some products lack the needed attraction, rural populations and agriculture are not considered profitable, there are adjustment issues, and some religious inclinations which can be tackled through proper introduction of Takaful.
He said that it is unfortunate that the insurance sector did not benefit from CPEC the way it was expected which should be ratified by the Insurance Association of Pakistan by forwarding implementable recommendations while FPCCI will also cooperate in implementation of proposals.
He said that office of the Federal Insurance Ombudsman is doing a good job. It has decided 74869 complaints during 2019 which is commendable. It should do more to increase awareness among the masses, he added.
Apart from the praiseworthy Insaf Sehat Card Scheme, government should support this sector to bring a change in the lives of tens of millions of people who find it very difficult to manage affairs if something happens to their businesses or families.
Insurance is very popular in the western world but it is not understood well in some eastern countries for which efforts by all the stakeholders are needed, he said.
