ISLAMABAD, Nov 23: Insurance policy documents of a large number of people who died in the Oct 8 earthquake were lost in the debris, creating a controversy over practicability of investigation that insurance companies normally conduct and the present rules of filing claims.
Sources at the Securities and Exchange Commission of Pakistan (SECP) and a number of an insurance company told Dawn that losses the earthquake had caused to the insurance business in Pakistan were not expected to be as high as that of Katrina and Rita which caused around $60 billion losses to the insurance industry in the US.
The reason, they said, was simple: there was no trend of commodities insurance in Pakistan and people normally went for life insurance. However, in Pakistan a new controversy has emerged as a large number of policy documents of the clients of various insurance companies are missing. They are now a part of the debris.
The SECP has asked the Insurance Association of Pakistan to calculate the damages to the insurance industry and present a report to the commission at the earliest. However, the losses are feared to be greater for those companies that deal in life insurance.
Chief of the Islamabad zone of State Life Insurance Corporation (SLIC), Ansar Khan told Dawn that they had estimated a loss of Rs200 million to SLIC only in the Muzaffarabad zone. He said all zonal chiefs in the earthquake-affected areas have received a circulation from the SLIC management that insurance claims must be cleared within 24 hours without conducting the normal investigation procedure.
However, he said he was not sure whether other companies were willing to soften their investigation procedure or not. He said branches of SLIC in the tremor-hit areas were receiving very few claims because the policy documents of a large number of clients had been missing. Moreover, he said a good number of sales executives of the company, who ensured clients, had also been killed in the earthquake.
Mr Khan said SLIC could easily manage the losses as it normally paid Rs2.5 million in death claims and Rs1.5 million in maturity claims in each working hour.
Though the trend of commodities insurance is missing in Pakistan, the final losses to the companies could be greater than expected, the sources at the SECP said.
According to the SECP data till June this year, there were 55 private sector insurance companies operating in the country — four foreign, 50 local enterprises and a company registered as Takaful operator. Of the 50 local companies, 48 were engaged in non-life insurance business and two in life insurance. In case of foreign insurers, two companies operated in non-life and two in life insurance sectors. Thirty-four companies were listed on the KSE having a paid-up capital of Rs5,687m, excluding National Insurance Company Limited (NICL).
LIFE INSURANCE: The public sector in the insurance industry comprised of four state-owned entities — State Life Insurance Corporation of Pakistan (SLIC), National Insurance Company Ltd (NICL), Pakistan Reinsurance Company Limited (PRCL) and Alpha Insurance Company Limited, a subsidiary of SLIC. While SLIC is engaged in life insurance business, NICL provides non-life insurance coverage to public sector entities. PRCL remains the only local enterprise in the business of reinsurance.
SLIC remained the major share holder by total gross premium, with 76pc market share in 2004. Assets of life insurance companies grew by almost 15pc to Rs123.9bn during the year 2004. Major portion of the assets were invested in government securities and listed equities.
NON-LIFE INSURANCE: The private sector non-life insurance business was largely dominated by top 10 insurance companies, which accounted for almost 84 per cent of the total premium written by the sector.
The total gross direct premium written by non-life insurance companies, excluding that by the state-owned NICL, increased by 16 per cent to Rs18.05bn during the year ended December 31, 2004. Of this amount, Rs15.18bn was written by the 10 largest insurance companies, while 32 companies underwrote the balance of Rs2.88 billion.
Moreover, six non-life insurance companies, which were directed to cease entering into new contracts of insurance due to shortfall in paid-up capital during the year 2003, were unable to underwrite new business. The premium underwritten by NICL during the year amounted to Rs4.01 billion.
Fire and property damage insurance portfolio of the non-life insurance sector increased to Rs7.26bn while marine, aviation and transport insurance increased to Rs5.29bn. The motor business insurance, accident and health and miscellaneous insurance went up to Rs6.6bn, Rs0.85bn and Rs1.65bn, respectively, during the year ending December 31, 2004.
The underwritten profit/loss of the non-life insurance sector is estimated at Rs2.471bn. In the same year, total assets of the non-life insurance sector increased by 16.3 per cent to Rs43.468 billion.
