The gross premium (GP) of the non-life insurance is expected to touch Rs 105 billion mark by the end of 2011 with an expected growth rate of 25 percent annually for the next five years.
Analysts say that insurance penetration in Pakistan is one of the lowest in the region as non-life insurance density in the country arrives at 2.8 dollar as compared to world average of 219 dollar and Asia region average of 48.3 dollar.
Similarly, till 2005 non-life insurance penetration in Pakistan is just 0.4 percent of gross domestic product (GDP) as compared to world average of 3.2 percent and Asian countries of 1.7 percent.
In 2006, gross premium of listed non-insurance companies soared by 24 percent to Rs 26 billion. "We feel the rising industrialisation, growing trade activities, double digit growth in car sales and increasing awareness about insurance products are the reasons behind this growth," Muhammad Imran, head of research at First Capital Securities said.
He said the growth in insurance premium was attributable to the growth in GDP vis-à-vis rise in per capita income. There is a strong relationship between rising per capita income and growth in insurance premium.
Using the growth of listed companies as a proxy for Pakistan's total non-life insurance sector then it translates into a gross underwriting business of Rs 34 billion. Interestingly, it reflects non-life insurance sector density of 3.2 dollar whereas non-life insurance penetration of 0.44 percent on 2006 gross premium.
Imran said due to easy availability and relatively smaller size of insurance companies, Motor business occupies 51 percent in the total net premium, that is followed by fire and miscellaneous segment with a share of 17 percent each while Marine captured a share of 16 percent. In India, the fire segment represents 16 percent of net premium, five percent is the share of marine business, while motor and miscellaneous represents 79 percent of net premium.
The EFU has become the largest non-life insurer due to motor business as the gross premium of EFU General Insurance has reached Rs 8.5 billion and it has become the largest non-life insurer in Pakistan on the basis of 2006 gross premium.
A sector wise analysis reveals that the reason behind such huge growth is due to the heavy exposure of EFU in Motor business. EFU General 53 percent of gross premium is captured by its motor business whereas on the basis of net premium this share arrives at 75 percent. On the other hand, Adamjee Insurance's gross premium recorded at Rs 7.9 billion and with the exception of Motor business, it remains the market leader in all other segments that is property, marine and miscellaneous. Third position occupied by the New Jubilee Insurance with a gross premium of Rs 2.57 billion.
It is worth mentioning here that National Insurance is not incorporated in this analysis, as its result was not available. The emphasis here is on the growth of gross premium of private listed non-life insurance companies which has a representation of 54 percent in total non-life insurance sector (listed and non-listed). These 21 companies have more than 95 percent in listed non-life insurance companies on the basis of 2005/2006 gross premium.
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