KARACHI, Sept 21: The private general insurance is gearing up to grab new business opportunities that are emerging from a fast track privatization programme, growing construction industry, increasing international trade and equally expanding domestic wholesale and retail trade.
Not only that the new general insurance companies with a minimum capital base of Rs200 million are in process of coming up in the market, there are reports of insurance operators with small capital base but with rich experience are considering to merge and take the emerging situation head on.
Anticipating all prospects of expanding business in the coming days, the leaders of the general insurance business have drawn up an elaborate road map to put in place a practicable and effective code of conduct, make business self-regulatory and observe the accounting standards laid down in the insurance rules.
Structural changes are under way at the company level also. A few companies are now desperately looking for trained, experienced and qualified personnel to explore the business opportunities. “A chief executive now demands Rs10 million annual salary with a shareholding in the company,” a senior executive of one of the oldest and top insurance companies informed Dawn in an informal chat.
In last three years, 26 big public sector entities have been privatized that generated proceeds of more than Rs240 billion. The international trade during 04-05 exceeded $34 billion (more than two trillion rupees) and services sector that have wholesale and retail trade as big components are now more than 50 per cent of Pakistan’s economy.
All these economic developments have offered business opportunities to the general insurance companies. The companies are now in process of fast restructuring, revamping and equipping with new technology. New equations are being worked out with the banks, customers and with the re-insurers. Rejection of claims — big or small — is being done at the top level in a few top companies.
Reduced to almost nothing, after the nationalization of life insurance business, government take-over of a variety of trade and industry and eventually the setting up of a public sector National Insurance Corporation to give insurance cover to all government business, the private general insurance remained in total disarray for more than 25 years. General insurance remained a family business for more than two decades. The handsome dividends that were declared during the decade of eighties were shared by a few families.
Sustained economic growth in last three years which touched peak of 8.4 per cent in 04-05, and phenomenal growth in international trade last year when imports exceeded $20 billion and exports over $14 billion, the private general insurance business has got an impetus. The insurance companies are now preparing to capitalize on more than Rs300bn privatization business and more than $40 billion (Rs2.4 trillion) international trade.
Total gross premium of the 30 odd general insurance companies exceeded Rs17.68 billion in 04-05 when all these companies showed assets of about Rs27.5 billion. All the 30 companies have now a minimum capital base of Rs80 million. Three companies have capital base of over Rs200 million including one which has over Rs826 million, followed by Rs318.24 million of another company and one with Rs210 million. There are nine companies with more than Rs100 million capital base.
After a long period of internal strife, the IAP has been revived and the Central Committee has been given a new role to enforce the code of conduct and oversee its compliance by the member companies.
Training programmes are being drawn up for the fresh recruits and refresher programmes are being prepared for those who are working. The IAP now plans to put motor insurance business and to effectively put an end to the business now being virtually controlled by the bogus and paper companies in connivance with the police and provincial excise and taxation departments.
