After strong growth in recent years, Pakistan’s insurance sector faced a challenging 2008, as did the country at large. The already acute risks to Pakistan’s security were accompanied by a sudden change of political leadership, which was followed by a period of precipitous fiscal and economic decline. In 2009, the political and economic situation has stabilised to an extent, while the security situation has deteriorated yet further. These cross-currents have been felt in the insurance sector.
According to the Insurance Association of Pakistan (IAP), gross non-life premiums of business underwritten in Pakistan totalled PKR33.96bn (US$428mn) in 2008, a rise of 3% over the previous year. Net premium revenue increased by 10% to PKR22bn (US$264mn), while underwriting profits recovered from PKR600mn to PKR2bn (US$24mn). Net claims decreased by 3.5% to PKR13.8bn (US$166mn). However, the total assets of IAP members fell by PKR7bn to PKR92bn (US$1.1bn). This was due mainly to investment losses amid the dismal performance of both the Karachi stock market and the wider national economy. The number of people employed in the sector also fell, according to the IAP’s figures. In 2007 there were 3,540 insurance workers, but only 3,473 in 2008. The non-life sector remains fragmented, with fierce competition between the three larger companies and dozens of small insurers writing premiums of below PKR1mn per annum.
The overwhelmingly dominant player in the life sector remains the State Life Insurance Corporation of Pakistan (SLIC). Although it has been targeted for privatisation by successive governments, SLIC remains in state hands. However, the government’s stand-by loan agreement with the International Monetary Fund might accelerate the process of disinvestment. SLIC’s results provide an accurate picture of the overall growth of the life sector in Pakistan.
The most significant feature of SLIC’s 2008 performance was a sharp upward movement in first year premium subscriptions. These increased by 34% to PKR5.16bn (US$61mn), a rapid acceleration from the decade-average growth rate. Renewals grew much less rapidly, at 16% to PKR13.4bn (US$160mn). The surge in interest for life insurance may reflect the dwindling prospects for personal security in Pakistan – Islamist militancy is now commonplace even in the heavily populated Punjabi heartland. This might conceivably mark an improvement in the hitherto dismal prospects for the life sector. As we noted in our last report, life density remains extremely low despite efforts by SLIC to extend its operations into rural areas.
According to the Insurance Association of Pakistan (IAP), gross non-life premiums of business underwritten in Pakistan totalled PKR33.96bn (US$428mn) in 2008, a rise of 3% over the previous year. Net premium revenue increased by 10% to PKR22bn (US$264mn), while underwriting profits recovered from PKR600mn to PKR2bn (US$24mn). Net claims decreased by 3.5% to PKR13.8bn (US$166mn). However, the total assets of IAP members fell by PKR7bn to PKR92bn (US$1.1bn). This was due mainly to investment losses amid the dismal performance of both the Karachi stock market and the wider national economy. The number of people employed in the sector also fell, according to the IAP’s figures. In 2007 there were 3,540 insurance workers, but only 3,473 in 2008. The non-life sector remains fragmented, with fierce competition between the three larger companies and dozens of small insurers writing premiums of below PKR1mn per annum.
The overwhelmingly dominant player in the life sector remains the State Life Insurance Corporation of Pakistan (SLIC). Although it has been targeted for privatisation by successive governments, SLIC remains in state hands. However, the government’s stand-by loan agreement with the International Monetary Fund might accelerate the process of disinvestment. SLIC’s results provide an accurate picture of the overall growth of the life sector in Pakistan.
The most significant feature of SLIC’s 2008 performance was a sharp upward movement in first year premium subscriptions. These increased by 34% to PKR5.16bn (US$61mn), a rapid acceleration from the decade-average growth rate. Renewals grew much less rapidly, at 16% to PKR13.4bn (US$160mn). The surge in interest for life insurance may reflect the dwindling prospects for personal security in Pakistan – Islamist militancy is now commonplace even in the heavily populated Punjabi heartland. This might conceivably mark an improvement in the hitherto dismal prospects for the life sector. As we noted in our last report, life density remains extremely low despite efforts by SLIC to extend its operations into rural areas.
No comments:
Post a Comment