Transcript Preview Presentation

General Insurance Sector
• There are active 31 Private and 1 Public Insurance Company.
• 63% of the general Insurance market share is with the top
three companies.
• As of May 31, 2008, 11 companies have been ceased due to
Capital and Solvency requirements, while the winding up of 10
companies is in process.
• License to 1 insurance company and 1 broker is under
consideration.
• Considering the small revenue base of the sector, effective
steps should be taken to promote mergers and acquisitions.
1
General Insurance Sector
Current Growth & Penetration
1988-2008
•The insurance industry continues to show sluggish growth every year.
• The insurance penetration remains 0.7% of the GDP, which is one of the
lowest in the world.
•Unlike the more developed markets, only B2B selling is prevalent which has
become expensive and has begun to erode profits and reserves.
2
General Insurance Sector
Recent & Emerging Scenario
45,000
40,000
38,354
40,608
33,322
35,000
Rs. in mln
30,000
25,000
20,000
15,000
10,000
5,000
0
2006
2007
Years
2008
• Insurance Sector grew by only 6% in 2008.
• Profit margins will shrink further due to the impact of globalization and maturing markets.
• The market has witnessed introduction of new products like health, crop, livestock.
• New distribution channels such as Bancassurance, Websales & Telesales have emerged.
3
Gross Premium
350000
304810
Value in Rs. millions
300000
271340
250000
224920
200000
195220
Pakistan
173580
India
152450
150000
127240
100000
50000
16612.979
16545.394
2002
2003
21864
27490
33322
38354
40607
0
2004
2005
2006
2007
2008
Years
4
Insurance Penetration
0.8
0.7
0.67
0.62
0.64
0.61
Numbers
0.6
0.6
0.5
0.5
0.43
0.4
0.6
0.38
0.4
0.4
0.38
Pakistan
India
0.3
0.2
0.1
0
2002
2003
2004
2005
2006
2007
Years
5
Insurance Density
7
6.2
6
5.2
Numbers
5
4.4
3
2
3.9
4
4
3.6
3.5
3
Pakistan
India
2.8
1.7
1.8
2002
2003
2.2
1
0
2004
2005
2006
2007
Years
6
Market Share
Life Insurance Sector
Market Share of Public & Pvt. Life Insurers
100%
90%
80%
Percentage
70%
60%
Pvt. Sector
50%
Public Sector
40%
30%
20%
10%
0%
1973
1980
1985
1990
1995
2000
2005
2007
2008
Years
•State Life enjoys a clear monopoly with 65% of market share but its market
share is eroding rapidly.
•Top 3 life insurers (including State Life) are holding 96% of the market share.
•Market Share of 2 Family Takaful operators is merely 0.38%.
7
Life Insurance Sector
Gross Premium (2002-2008)
40,000,000
Value in Rs. '000
35,000,000
30,000,000
25,000,000
Life Industry
20,000,000
Public Sector
15,000,000
Pvt. Sector
10,000,000
5,000,000
2002
2003
2004
2005
2006
2007
2008
Years
Average Growth Rate :
Life industry:
Public Sector:
Pvt. Sector:
23%
18%
37%
To date there are 9 entities registered as Life Insurers including 2 Family
Takaful Co. and 1 Health Insurance Company.
8
Gross Premium
2,250
2,014
2,000
Value in Rs. Billion
1,750
1,561
1,500
1,250
Pakistan
1,059
1,000
India
829
750
667
500
557
501
250
-
10
13
15
19
2002
2003
2004
2005
23
28
35
2006
2007
2008
Years
9
Insurance Penetration
4.5
4.1
4
4
3.5
Numbers
3
2.5
2.59
2.53
2.53
2.26
Pakistan
India
2
1.5
1
0.5
0.24
0.24
0.28
0.27
0.3
0.3
2004
2005
2006
2007
0
2002
2003
Years
10
Insurance Density
45
40.4
40
35
33.2
Number
30
25
Pakistan
20
15
15.7
11.7
India
18.3
12.9
10
5
0
1
2002
1.1
2003
1.5
1.9
2.3
2004
2005
2006
2.6
2007
Years
11
Insurance Penetration (Life & Non-Life)
6
5
4.8
4.7
Numbers
4
3.26
3
2.88
2.71
3.17
Pakistan
3.14
India
2
1
0.68
0.62
0.62
0.71
0.67
0.8
0.7
2006
2007
0
2001
2002
2003
2004
2005
Years
12
Our Vision
To promote the orderly development of a
financially strong and transparent insurance
industry, thereby increasing the insurance
penetration in Pakistan
13
Insurance Ordinance 2000
•
Although the Insurance Ordinance addresses major aspects of
Insurance business, yet it lacks the depth prevalent in legislations
of other countries.
•
Major emphasis has been on compliance. However, more proactive
Regulators have demonstrated a strategic balance between market
development & regulation.
•
Broad financial indicators are defined, but a specific framework for
an ‘Early warning system’ is not available.
•
There are no information standards for the Industry for Risk
appraisal, forecasting & sharing of critical information.
14
Role of the Regulator
•
•
To increase our involvement due to the failure of the ‘Free
Market’ model.
To act not only as a Regulator but mainly as a Facilitator.
•
Prevent frauds & abuses from becoming systemic so that they
do not consume the market.
•
To formulate policies and development strategies which
increase the Insurance penetration in Pakistan.
•
Encourage healthy competition and implement International
best practices.
15
Strategic Roadmap
2009
•Organize internally
•Automate our processes
•Develop more positive relations with the Insurance Industry.
•Develop contacts & cooperation with International Regulatory
Organizations.
•Respond in ‘Real Time’ to emergency cases with the help of
‘Early Warning’ tools.
•Formulate a data sharing mechanism for actuarial risk
calculation & development of Rating Models.
16