Insurance Penetration in Pakistan
By Imtiaz Bhatti
Managing Director & CEO
PAK-KUWAIT TAKAFUL COMPANY LTD
PAK-KUWAIT TAKAFUL COMPANY LTD
CURRENT STATE OF AFFAIRS
 Insurance penetration and insurance
density are the two widely used
parameters for the assessment of the
potential and performance of the
insurance sector.
 Insurance penetration is calculated as the
ratio of the percentage of total insurance
premiums to gross domestic products
(GDP). Currently Pakistan has the lowest
insurance penetration in the region.
Market Size and Growth
Total Insurance Penetration – 2011, Pakistan vs
MENA
Pakistan
4%
General Penetration : 0.3%
Life Penetration
: 0.4%
3%
2%
0.7%
1%
0%
LBN MAR JOR TUN UAE IRN OMN KSA EGY KZH QAT PAK ALG KWT
 The insurance penetration is impacted by
several macro-economic factors such as
growth, inflation, interest rates, savings
return and returns of financial products by
Banks and Mutual Fund.
 Current insurance penetration rate 0.7% of
GDP.
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PAK-KUWAIT TAKAFUL COMPANY LTD
MAJOR REASONS FOR LOW INSURANCE PENETRATION
 Low awareness in general with
specific in rural areas.
 Non-availability
income.
of
disposable
 Negative growth of middle class
population.
 Lack of any incentive by the Govt.
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PAK-KUWAIT TAKAFUL COMPANY LTD
STAKE HOLDERS OF THE INDUSTRY CATALYST FOR
INCREASING INSURANCE PENETRATION
 Insurance Association of Pakistan (IAP)
 Pakistan Insurance Institute (PII)
 Agents/Brokers
 BANKS/Financial Institutions
 Regulators
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PAK-KUWAIT TAKAFUL COMPANY LTD
HOW TO INCREASE INSURANCE PENETRATION
Awareness
campaign
Leveraging
consumer
bodies by
holding
seminars
and
workshops
Collective
effort by IAP
Promoting
consumer
education
and
information
Creating
more
organized
distribution
channels
Focused
approach for
smaller
players and
new entrants
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PAK-KUWAIT TAKAFUL COMPANY LTD
HOW TO INCREASE INSURANCE PENETRATION
Awareness campaign
 Identify what exactly needs to be done.
 Steps to be taken forward with a serious note clearly focusing at the various profiles of
the consumer/citizen socially and commercially.
 Educate the uninsured and the insured about the need of insurance, rights, obligations of
policy holders etc. through various media channels viz. print, radio and television.
Leveraging consumer bodies by holding seminars and workshops
 Seeking support from SECP for consumer bodies in conducting seminars and
workshops on insurance in various parts of the country in order to create
awareness about insurance.
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PAK-KUWAIT TAKAFUL COMPANY LTD
HOW TO INCREASE INSURANCE PENETRATION
Collective Effort by IAP
 All the insurance companies under the umbrella of IAP should pool a sizeable budget to the activity of
publicity through various means of communication. The campaign should encompass the following
features:
a)
b)
c)
d)
e)
Simplicity of messaging
Universally understood
Language extensibility
Appeal to a wide section of society
Adaptable to multiple media and product segments.
Creating organized distribution channel

Banc assurance is increasingly becoming acceptable to customers than the traditional channels.

Insurers should invest in systematic training, technological capability and seamless process of
integration.

Capacity building in acquiring special skills in telephone and internet based direct selling e.g.
-
Pricing and selling specific product.
Sophisticated process management to provide a convenient and hassle free customer
services.
Straight through processing with minimal human intervention media and product segments.
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PAK-KUWAIT TAKAFUL COMPANY LTD
HOW TO INCREASE INSURANCE PENETRATION
Focused Approach for smaller & New Entrants
 To combat pressures from large players small companies will need to consider the following
approaches.
a)
Distinctive segment or channel specialist strategy to penetrate select spaces.
b)
Focuses on one or two customer segments adopting a tailored approach for deep
penetration.
c)
Build a high quality and profitable portfolio by becoming a channel specialist e.g.
-
Banca assurance
Direct only players
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PAK-KUWAIT TAKAFUL COMPANY LTD
CONCLUSION
The insurance penetration will certainly increase if people of Pakistan can be made
aware of the various risks associated with their life, business and internal and
external environment, nevertheless, the insurance business is the art of selling
promise and providing economic security which is the need of the hour to every
individual thereby strengthening the Nation’s economy and growth.
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THANK YOU.