2nd Pakistan Insurtech Summit

Transforming Pakistan's Insurance Landscape: Synergy of Tech, Partnership and Policy

2nd Pakistan Insurtech Summit

Theme: Transforming Pakistan's Insurance Landscape: Synergy of Tech, Partnership and Policy

 

The first PFN Insurtech Conference, themed “Insurtech Accelerate: Unleashing the Power of Technological Innovation in Pakistan’s Insurance Industry,” was held last year and highlighted the potential for growth and critical role of Pakistan’s insurance sector, overseen by the Securities and Exchange Commission of Pakistan (SECP). Despite a modest insurance penetration rate of 0.85% of GDP in 2020, the industry saw total gross written premiums of PKR 288 billion (USD 1.8 billion), with life insurance dominating the market. 

The discourse included the nascent but growing Insurtech landscape in Pakistan, driven by digital transformation, online aggregators, and innovative startups utilizing AI, data analytics, and blockchain to enhance customer experience and streamline operations. The SECP’s regulatory support, including a sandbox framework, fosters innovation and aims to boost insurance penetration.

Discussions at the conference also addressed the next decade’s challenges and opportunities, such as increasing consumer awareness, regulatory reforms, fostering partnerships between traditional insurers and tech startups, and promoting inclusive insurance to enhance financial inclusion. Overall, the conference emphasized the transformative potential of Insurtech to reshape the insurance industry through improved efficiency, innovative products, and expanded access, ultimately benefiting both insurers and policyholders.

Panel discussions delved into key topics such as “Life Insurance in Transformation: Recipe for the Next 10 Million Happy Customers,” “Non-Life Insurtech Revolution: A World of Digital Possibilities for Every Pakistani,” “Transforming Insurance: Leveraging Healthtech and Wellness for Enhanced Customer Satisfaction,” “Navigating the Insurance Ecosystem: Driving Innovation and Growth Through Strategic Partnerships and Alliances,” and “The Impact of Digital Insurance Brokers and Aggregators on Boosting Insurance Market Penetration.” These discussions addressed the next decade’s challenges and opportunities, including increasing consumer awareness, regulatory reforms, fostering partnerships between traditional insurers and tech startups, and promoting inclusive insurance to enhance financial inclusion.

 

Building upon last year’s Insurtech conference, PFN plans to further the discourse by emphasizing the current challenges and opportunities that can enhance the transformative potential of Insurtech to reshape the insurance industry through (for example) improved efficiency, innovative products, and expanded access, ultimately benefiting both insurers and policyholders. Some of these factors are listed below:

Current Insurtech Challenges and Opportunities:

  • Cybersecurity in Insurtech: Protecting Customer Data and Ensuring Trust
  • AI and Machine Learning in Underwriting: Improving Accuracy and Efficiency
  • Blockchain Technology: Revolutionizing Claims Processing and Fraud Detection
  • Leveraging Big Data Analytics: Personalizing Insurance Products and Services
  • Telematics and Usage-Based Insurance: Innovations and Implications
  • Customer Experience in Digital Insurance: Enhancing Engagement and Satisfaction
  • Financial Inclusion through Microinsurance: Reaching the Unserved and Underserved
  • Emerging Trends in Healthtech: Integrating Wellness Programs with Insurance
  • The Future of Takaful (Islamic Insurance) in the Digital Era
  • The Impact of Digital Insurance Brokers and Aggregators on Boosting Insurance Market Penetration
  • Regulatory Challenges and Opportunities: Navigating Compliance in the Digital Age
  • Partnerships between Traditional Insurers and Insurtech Startups: Models for Success
  • Scaling Insurtech Solutions: Challenges and Strategies for Growth
  • Building a Talent Pipeline for Insurtech: Skills and Training for the Future
  • Sustainable Insurance Practices: Integrating ESG Factors in Insurtech

Based on the above research there are three panel discussions proposed for the Insurtech section of the conference.

 

Panel Discussion 1: Driving Insurance Penetration in Pakistan: The Role of Insurtech, Banks, and FinTech Partnerships

 

Panel Discussion 2: Advancing Technology, Innovation and Enhancing Customer experience in Insurtech

 

Panel Discussion 3: Regulatory and Cultural Hurdles: Examining the Roadblocks to Introducing New Insurance Products in Pakistan

1st Pakistan Insurtech Summit

Theme: Unleashing the Power of technological innovation in pakistan's insurance industry

1. Insurance Industry in Pakistan:

The insurance industry in Pakistan has witnessed significant growth and development in recent years. It plays a crucial role in mitigating risks, promoting financial stability, and supporting economic growth. The regulatory authority for insurance in the country is the Securities and Exchange Commission of Pakistan (SECP).

a. Market Size and Penetration:

The insurance industry in Pakistan has been growing steadily, albeit from a relatively low base. According to the latest available data, the insurance penetration rate (premiums as a percentage of GDP) in Pakistan stood at around 0.85% in 2020. The total gross written premiums reached PKR 288 billion (approximately USD 1.8 billion) in the same year.

b. Types of Insurance:

The insurance sector in Pakistan covers various types of insurance, including life insurance, general insurance (property and casualty), health insurance, and takaful (Islamic insurance). Life insurance dominates the market, accounting for a significant portion of the total premiums.

c. Market Players:

The insurance industry in Pakistan consists of both public and private sector players. There are several insurance companies operating in the country, including State Life Insurance Corporation of Pakistan (the largest life insurer), EFU Life Assurance Ltd., Jubilee Life Insurance Company Ltd., Adamjee General, EFU General, Salaam Takaful among others.

2. Insurtech Landscape in Pakistan:

Introduction

Insurtech, a combination of “insurance” and “technology,” refers to the integration of innovative technologies within the insurance sector to enhance efficiency, customer experience, and product offerings.

In Pakistan, Insurtech is still in its early stages but has been gaining traction in recent years. Technological advancements and increased digitalization have created opportunities for Insurtech startups and traditional insurance companies to innovate and provide more efficient and customer-centric services.

a. Digital Transformation:

Insurance companies in Pakistan are increasingly adopting digital technologies to acquire new customers, streamline their operations, improve customer experience, and enhance underwriting and claims processes. Digital platforms and mobile apps are being used to facilitate policy purchases, renewals, and claims settlements.

b. Online Aggregators:

Online insurance aggregators in Pakistan are allowing consumers to compare and purchase insurance policies from multiple providers on a single platform. These aggregators provide transparency and convenience to customers, helping them make informed decisions.

c. Insurtech Startups:

There has been an arrival of a number of Insurtech startups focusing on various aspects of the insurance value chain. These startups leverage technologies such as artificial intelligence (AI), data analytics, and blockchain to offer innovative insurance products, improve risk assessment, and streamline claims processes.

d. Regulatory Framework:

The SECP has recognized the importance of fostering innovation in the insurance sector and has introduced regulatory initiatives to support Insurtech development. The regulatory sandbox framework allows Insurtech startups to test their innovative products and services in a controlled environment. The regulator (SECP) and the government also have a significant role to play in creating an enabling environment to increase insurance penetration in Pakistan.

According to State Bank of Pakistan report, in 2021, insurance premiums for both the life and non-life sectors increased following a resumption of economic activities. Gross premiums for life registered a significant jump due to a doubling of group premiums as the national health insurance program expanded. With more health insurance policies being underwritten, claims for life also increased resulting in an overall increasing claims ratio. Nevertheless, the life sector posted higher profits on the back of an increase in premiums.

According to the SECP, in Pakistan’s insurance landscape, technology primarily finds its role in distribution. This involves the use of Point of Sales systems in bancassurance, mobile apps, and websites by insurers and partners. These platforms serve purposes like information dissemination, customer engagement, insurance sales, and online comparisons. Insurers operate their own online sales platforms, offering initial protection-focused products, and also collaborate with third-party digital platforms such as banks, mobile operators, aggregators, and Insurtech companies.

However, the full extent of technology’s impact on insurance growth is yet to fully materialize. Presently, only 27 online insurance products have been registered with the SECP under Section 13 of the Insurance Ordinance, 2000, following the “file and use” procedure. Additionally, technology remains largely untapped in other insurance domains like innovative tech-based products, automated underwriting, policy administration, claims processing, and payments.

The SECP has also announced (2021) the plan for a registration system for digital-only insurance and microinsurance. This move seeks to enhance competition, diversify products, improve customer experiences, and boost financial inclusion. These changes have been incorporated through amendments to the Insurance Rules, 2017. The framework requires the digital-only insurer to develop digital claim lodging and payment process since inception of operations, whilst demonstrating through implementation plan towards complete transition to digitalize claims processing comprising of claim intimation, claims assessment and payment.

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