Faisal Shahzad Abbasi is the CEO of TPL Life. His prior 24-year experience consists of working in key leadership positions across the life Insurance, actuarial consultancy, and banking sectors in Pakistan. He has been associated with Jubilee Life Insurance, Royal Bank of Scotland, and ABN Amro NV. He also has vast experience in launching startups, successful businesses, and franchise development. His areas of expertise include sales management, digital sales strategies, bancassurance, underwriting, and product management.

Faisal completed his EMBA degree in Management from Karachi School of Business and Leadership. He also did his MDP from Lahore University of Management Sciences (LUMS).

Following are the edited transcripts of a recent conversation BR Research had with Faisal Shahzad:

BR Research: How has the insurance industry - primarily the life insurance segment - performed over the past few years including the pandemic-hit times, and how TPL Life Insurance has been sailing through?

Faisal Shahzad Abbasi: The overall insurance sector of Pakistan is legacy-driven with conventional practices that require further innovation and technology. There is a need to cover a lot of ground as far as consumer expectation is concerned because they expect a lot from the financial institutions; you can see that the banking sector is coming up with new, innovative, and process-re engineered products. My take on the current life insurance sector is that it needs to catch on and increase the speed of innovation.

What has the pandemic done to the sector? I think the COVID pandemic has been a blessing in disguise as far as soul searching is concerned because it drove us to innovate and demanded from us to reengineer our processes to match customer expectations. This is what we did at TPL Life Insurance and I am happy that we led from the front as far as innovation is concerned. Otherwise, this was a dull sector in this respect.

BRR: Can you tell us what kind of innovation and ‘out-of-the-box thinking’ has TPL been bringing in the life insurance sector?

FSA: TPL Life was founded in 2016, and our formal operations started at the beginning of 2017. When we were drafting the strategy, we were pretty sure that we cannot go the traditional way if we want to make a niche for ourselves in the market. We knew from the beginning that our offerings, processes, and products should be different from what is generally being offered to the consumer by other life insurance companies.

We introduced tech-based, paperless, digital products for our customers. And we also introduced new concepts in the market such as insurance based on scratch cards where customers can go to a retail shop and buy insurance just like any other product, use it and dispose it. We were the first company to offer time-based life insurance through mobile. We also introduced a 360 digital telehealth solution. When COVID hit, we were the first company to introduce a COVID insurance product to the market. Apart from that, we were also the first company to introduce usage-based insurance where the customer has the power to activate insurance at the time of need and turn it off when the need is over, and the customer is only charged for the period he or she used the insurance product. All this is done through our app. We have been the pioneers of paperless, digital, insurtech solutions in the market.

BRR: So Insurtech is TPL Life’s USP in a market where the life insurance industry is dominated by a key public sector player followed by a couple of large private sector players.

FSA: Yes definitely. We choose this particular area i.e. insuretech intentionally.. Other companies were mainly focusing on investment-based unit-like products. We have that product in our showcase, but strategizing to compete on that front with companies with 25-30 year vintage will exhaust resources and time hence we chose not to.

BRR: What are the key challenges the sector faces that need to be addressed on an immediate basis for unleashing growth in the industry?

FSA: Right now on the regulatory side, one issue that we face is a sales tax-related matter for the health insurance market, which has been there for a few years, and both the government and the stakeholders have not been able to solve it.

Apart from that, the shortage of skilled human resources is one challenge that we are facing. The way the world is changing, we need specialized resources. The quality of human resources and their skillset needs to be aligned for the insurance sector; the sector is being driven by lateral minded people with a similar skill set, which needs to change

Another challenge we face is the up-gradation of existing technological solutions. They have to be upgraded very quickly because customer demands are ever-increasing

BRR: how are gross premiums performing? And what is the trend on the claims side in the last year?

FSA: For how things took a turn in recent times due to pandemic, life insurance segment which has been largely depending on the bancassurance channel saw limited growth and since the bank branches had restricted operations impacted during last year due to the pandemic, the growth in the premiums of life insurance segment was restricted and curtailed. Things are getting better gradually now but this has affected us along with other players in the market.

On the claims side, both health and life insurance were directly impacted, especially during and after the third and the fourth wave of the pandemic in the country as the death toll increased. So we observe overall claims ratios going up.

BRR: Insurance penetration in Pakistan is negligible. What countries or models do you think can emulate to increase our penetration?

FSA: There are different models being followed across countries. But insurance penetration is primarily dependent on two things: one, the population available to be sold insurance; and second the awareness to the masses about the benefits and value that insurance products create. Pakistan has a huge untapped population; however, what needs attention both at the government and sector level is to invest in creating awareness. The government will have to make insurance mandatory through policy for certain pockets of the society like it is in many other countries. This will help not only increase insurance penetration but also awareness. When private players entered the Indian market in the early 2000s, the government invested heavily in creating mass awareness, which helped the country’s insurance penetration go up significantly.

BRR: One issue that the sector faces is the acceptance from the people from the religious point of view. But at the same time, Takaful has also gained a strong foothold in the market. Has takaful been able to bridge the trust issue?

FSA: It's more about how a product can add value to a person’s life rather than religious beliefs, because as I earlier said, people, don't have awareness about the uses of insurance. They need that information to make decisions. Right now, insurance products are sold through a push strategy; to bring a behavioral change, we need to move towards a pull strategy through advertising, promotion, and any other form of effective communication to instigate customers to demand insurance products.

BRR: So, what is that one hurdle for a reason why knowing all this, neither the government nor the sector has been able to adopt ways to increase insurance penetration in the country?

FSA: I think there is some level of complacency in the sector. The big players seem satisfied with current growth and numbers, while the smaller players who have the vigor; lack the financial muscle. You need a combination of both.

It is important to focus on innovation derived from the sector. Right now, it is being driven only by non-sector players and intermediaries like brokers and digital players. The major players of the sector have to come forward and bring technology-driven solutions. This will instill behavioral and mindset change within consumers.

Larger players also need to play their role because right now such work is only being pushed by new players at a smaller scale, or being driven by brokers/intermediaries that do not have the capability to underwrite risk on their own. . The sector players and the regulator will have to take ownership.

BRR: What are your expectations and hopes for the industry post-COVID and in the next few years?

FSA: What we have seen is that customer expectations have gone substantially up during the pandemic, and they want every solution at their doorstep and in their palm. We have to work according to this changing mindset, and I see this happening in the future in the life insurance industry. We have no option but to catch up on consumer behavior and expectations. Companies will have to soul-search and come up with smart solutions. The need and time for traditional life insurance solutions are over now.

BRR: In the same vein, what kind of products are TPL working on in the next couple of years?

FSA: We are studying the customer mindset very intricately, and we conduct those studies very regularly where we try to gauge what customers want. Our primary focus is to introduce international concepts and expose people to smart solutions rather than the traditional ones. In the next two years, we will continue targeting Gen Z and devise products and solutions for them.