How many people around you have ever willingly bought an insurance policy? It can’t be a lot, at least if you exclude the Sehat card that the citizens of Khyber Pakhtunkhwa and Punjab are entitled to. That’s because Pakistan has one of the worst insurance penetration rates among regional or economic peers — at just 0.91 per cent (life and general insurance combined).

It’s sort of ironic because the country has no shortage of events for which one needs insurance against — reckless drivers on the road that risk your life, contaminations that harm your health, or workplaces that offer no pensions. You would imagine more people wanting to protect themselves from such uncertainty, right?

There are multiple reasons why insurance as an industry has failed to take off. From religious perceptions to distribution, nothing seems to have really worked out in the past.

Surprisingly, the only outlier which outperformed the market has been a public sector entity: State Life Insurance Corporation. To put its scale in context, it is among the largest employers in the country with around 5,500 staff and 130,000 sales personnel registered, according to Chairman Shoaib Javed Hussain.

You’re probably thinking what’s the big deal about that since public sector organisations are almost always bloated. That’s not necessarily the case here because unlike others, it is a profitable entity that recorded a net income of Rs9.32 billion in the first nine months of fiscal year 2022 (9M2022).

For insurance companies, a better indicator of financial health is probably the premium revenue, the collections from policyholders, which reached Rs279bn in 2022. This was 64pc higher compared to the previous year and puts it among some of the biggest organisations in the country in any sector.

In insurance specifically, State Life is by far the largest player.

“Our market share as of Dec 2020 was around 52pc and is expected to reach 65pc for 2022,” says Hussain, an actuary by qualification, who took charge of the public sector giant in early 2021 and has previously served in executive roles at leading international insurance organisations.

“When I came on, I was told that the entire group market in Pakistan is Rs10-15bn. And you know, the four or five insurance companies more or less keep their share each year. That’s about it. Our 2020 group business would have been about Rs3-4bn but in 2022, we surpassed by Rs10.5bn. Now we haven’t necessarily taken the market share, but actually grown the size of the piece while still dominating it,” he says.

“The great thing is that every line of business has increased — individual life, group life and pension, and health businesses.”

Sometime back, the insurance giant unlocked another massive revenue stream in the health business as it won the Sehat Card tender for Punjab and Khyber Pakhtunkhwa. As a result, they now have access to around 175m Pakistanis, or two thirds of the country’s total population, according to Hussain. Managing its execution was a herculean task though.

“In December 2021, the legal agreements were signed and we were given a very short timeframe of three to four months to administratively service all of the job. It meant hiring people, training them, having service desks at every hospital, the linkages between the hospital staff and our staff. And that is just the front office. Think about the back office, where all the claims cases come in. Not only just processing the product finance from the company perspective, but also the risk.”

Pakistan’s disappointing insurance uptake is also partly attributed to the way products are packaged. For example, bancassurance being sold as an investment instrument, which ends up costing the policyholders of their hard-earned money. That’s where innovation comes into play.

“Over the past two years that I’ve been here, we’ve launched 22 new products across life and health. And the great thing is that the growth we’re seeing in individual life is being driven by the new products. Especially the golden endowment, which we’ve technically revised in terms of the premium and payout timelines,” explains Hussain.

In that same vein, the company is now pushing towards small ticket insurance policies that can be sold conveniently through online channels. Over a year ago, State Life launched its digital portal where anyone can buy a policy end to end, and pay via card. However, as expected, the uptake is still low, even though there is growth coming off a low base.

For Hussain, the bigger use of digital, right now, is towards improving internal systems, especially the claims process — which is yet another reason why people run away from insurance.

“We have already brought in e-claims for health and are now doing it for other areas like life, which will help improve the success rate further,” he says.

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