Seminar held on insurance as a tool to minimise business risk

The insurance industry plays an important role in the financial system by providing indemnification of financial risk in the economy and also serves as an institutional investor for both capital and money market instruments. Despite its relatively small size, the sector is supported by strong and transparent accounting and actuarial infrastructure.
Similarly, the reinsurance requirements for the sector are also very clear and well-defined. This was stated by Nasreen Rashid, Executive Director, Insurance Division Securities & Exchange Commission of Pakistan (SECP) while presiding over seminar on "Insurance as a Tool to Minimise Business Risk".
The seminar was organised by Karachi Branch Council (KBC) under the aegis of Institute of Cost and Management Accountants of Pakistan (ICMAP) on Wednesday. E.D., Insurance Division, SECP elaborated that like many other developing countries, the size of Pakistan's insurance industry is relatively small in proportion to its GDP. Currently, the insurance penetration in the country is only 0.7% of the GDP, which is one of the lowest in the world. The insurance density is also a mere USD 6.5 per capita. These figures reflect a tremendous scope for substantial development, if the right macro environment is established and an appropriate regulatory framework is developed.
She said that insurance industry in Pakistan could enhance its outreach penetration in the market by leveraging state-of-the-art technology and accessing multiple channels of distribution. "We are confident that despite the economic recession in the country and the reduced purchasing power of the consumers, if the B2C selling approach is adopted by the insurance companies and small ticket size products are developed which meet the demand in the retail market, the insurance density and penetration in the country could increase dramatically, providing an impetus to the sagging economy.
Nasreen said that it is the SECP's vision to promote the orderly development of a financially strong and transparent insurance industry, thereby increasing the insurance penetration in the country. She added that they saw their role not only as a regulator but mainly as a facilitator. They were taking many important steps in order to translate their vision into reality including development of micro-insurance, creation of terrorism insurance pool and mandatory third party motor liability.
Renowned speakers presented technical aspects on the subject by presenting papers, they were Muhammad Ali, G. M., EFU Life Insurance, P. Ahmed, CEO, Pak Qatar Family Takafut, Khurram Ali Khan, Head of Underwriting, EFU General Insurance Company Ltd, Jawed Ahmed, M. D. & CE New Jubilee Life Insurance Co Ltd. And Hasanali Abdullah, Chairman, Insurance Association of Pakistan said that insurers must improve profitability while meeting demands from regulators to reduce risk and from customers for improved products and customer service. Also, insurers in the annuities, pensions, and mon-life markets are rationalising product portfolios and reviewing distribution strategies.
Earlier Tariq Hussain, Chairman, KBC in his welcome address said that nobody could predict what could happen next. A concrete structure comprising one hundred stories could be brought down by a terrorist attack or by an earthquake of great magnitude resulting in losses to property and life. There are some losses that could not be covered but insurance could cover all the monetary losses. Therefore, the insurance is a must for anything that bears cost. It just helps to minimise the burden of money. There are many types of insurance ranging from life insurance to personal accident, house insurance, goods insurance, commercial business insurance, etc.