Syed Ali Hassan Zaidi is currently serving as the Chief Operating Officer for TPL Insurance where he also oversees the Strategy functions with special focus on Insurtech/digital initiatives. He is a thorough professional with diversified experience of over 15 years. Over the years, he has worked on multiple initiatives and projects which has significantly contributed to TPL Insurance securing top position in the industry.

Ali has previously worked at Ernst & Young for Pakistan and Dubai offices in the Audit and Assurance function. He also served as Finance Advisor for the implementation of SAP at Shell Pakistan. He is a fellow member of Institute of Chartered Accountants of Pakistan and Chartered Institute of Management Accountants – UK.

Following are the edited excerpts of a recent conversation BR Research had with him:

BR Research: How have the last 5 years been for the insurance sector? There have seen many developments, especially on the digital insurance (insurtech) and Takaful side, as well as once-in-a-century-like global events such as the COVID pandemic.

Ali Hassan Zaidi: We all know that the world has experienced unprecedented turbulence in the past 5 years and is still not over. Everyone was not affected in the same manner, and Pakistan fared better in the region during the pandemic and converted the threat into an opportunity. During these years, every industry realized the importance of technology and raced towards making investments in the digitization of its processes to avoid any future disruption and promote efficiency in its structure. Pakistan’s insurance sector is no exception, and much investment is being made in insurance solutions where existing insurance players are introducing tech-enabled insurance solutions, and new digital-only insurance brokers and companies have entered the market.

By virtue of a significant young population that is tech-savvy and will have the majority of the purchasing power in future years, the insurance industry is focused on the retail segment. This is a significant shift for the insurance industry of Pakistan, which has historically focused on corporate insurance only. Takaful business has also come under the spotlight, which has better adaptability and demand in the retail segment than corporates. The regulator has also stepped up and rolled out regulations for digital-only insurance companies and brokers.

BRR: How has TPL Insurance performed over these five years in terms of its portfolio and new products, gross premiums, and claims?

AHZ: TPL Insurance has always been a retail-centric insurer focused on providing tech-enabled solutions to its customers and benefited from its innovative disruptions introduced in the insurance industry of Pakistan. TPL Insurance is leading on the tech front through its Lifestyle Insurance Mobile App and multiple other digital assets that have increased its engagement with the customer many folds. TPL Insurance believes in going the extra mile for its customers and does not limit its services to the provision of claims. TPL Insurance customers can buy and renew policies, intimate claims, request changes to policies, and make payments all in real-time through its mobile app and online platform. The company has also developed an ecosystem that provides additional benefits to its customers, such as online doctor consultations, medical concierge, and nationwide discounts, amongst other features. This has improved our customer retention and has improved penetration in the tech-savvy younger population.

In addition to that, TPL Insurance has also diversified its portfolio on a multi-channel, multi-segment strategy enriching the product base and sales capacity and growing more from existing products and sales networks. In our multi-segment strategy, we focus on all target segments from micro, retail, and corporate alike, and around 30 percent of our portfolio comes from non-retail segments now. We launched Pakistan’s first yield-based crop insurance and livestock insurance with digital tagging and paving our way in other commercial lines products. Similarly, our multi-channel strategy has diversified into various customer touchpoints, including a significant digital footprint. This diversification prevents our dependency on any particular niche, and we look forward to more sustainable and multifaceted growth in the future.

BRR: What is TPL's focus on Takaful? And can you explain Takaful insurance and how it differs from conventional insurance?

AHZ: Insurance is a risk mitigation contract where the customer safeguards its asset against a defined risk. In conventional insurance, the contract transfers the risk from the customer to the insurance company. In takaful insurance, a trust is created where all its participants agree to share the risk amongst themselves without transferring the risk. Each participant contributes to the trust and agrees that in the case of a claim for any participant, the trust can assist that participant.

TPL Insurance was the first company to launch window takaful operations in 2014 and has been actively growing its takaful portfolio which now stands at approximately half of our total portfolio. TPL Insurance offers almost all non-life products under takaful arrangement; however, the major portfolio comprises motor and health businesses. We have separate teams looking after the takaful business with a primary focus on creating awareness about takaful and its products. When the customers are given a choice, they prefer to underwrite risks under the Takaful model. There are some good initiatives taken by the industry in the promotion of takaful business which will help in creating awareness in the general public, and the takaful industry, on the whole, will benefit from it.

BRR: What are some segments in general insurance that have been performing well while others still need a push? What have been the drivers for growth and inhibiting factors?

AHZ: General insurance in Pakistan is not a very well-developed sector, and we have one of the least penetrated insurance industries in the world. There are multiple factors, such as lack of innovation and product awareness, the minimal capital base of insurance companies, low underwriting capacities resulting in the majority of business being ceded out to international markets, and stiff competition as all insurance companies were focused on the corporate sector. We have yet to be able to materialize the true potential of insurance in a country that has the size of our population.

TPL Insurance was the first insurance company in Pakistan to focus on retail and micro insurance segments, which is entirely different from the corporate segment because of the distribution and servicing challenges of the retail segment. The sponsors of TPL Insurance have always supported piloting new initiatives and bringing new tech-enabled insurance solutions to Pakistan. Some of the products and services launched by TPL Insurance have been replicated by our competition, and we take pride in it and are always ready to provide any assistance to the industry which can improve the penetration of our industry. With our success in establishing a retail insurance brand, other insurers and new entrants are focusing on retail and micro-segments, providing digital solutions with cost-effective distribution and service to the masses. TPL Insurance is looking at it as healthy competition, and we are geared up to expand and take insurance to all corners of Pakistan, which we see would be a major disruption in Pakistan’s insurance history.

BRR: What are the prospects of agriculture insurance in the country?

AHZ: Agriculture insurance which mainly includes crop and livestock insurance, has never been focused on as it should be by the insurance companies, regulators, and other concerned institutions. The agriculture infrastructure in our country needs to be more supportive of the latest insurance products available in other developing countries, and a lot needs to be desired. Currently, the only active crop insurance is the mandatory calamity-based coverage which is taken by banks while financing the farmers. It protects the bank’s interest to some extent but not much for the farmer.

Last year, TPL Insurance launched yield-based crop insurance in collaboration with a foreign partner along with a couple of leading banks in Pakistan which the farmers and regulator received well. TPL Insurance is promoting the initiative on various forums, especially with concerned government departments, to take this initiative forward, as this could be a game changer for crop insurance in Pakistan. We have already seen a couple of insurance companies taking an interest in the initiative, and we expect to see more insurance companies offering yield-based crop insurance in the near future.

BRR: What are your thoughts on where the economy is heading, and what is the outlook for the insurance sector? What are your plans for TPL for the next 5 years?

AHZ: The economy is a global challenge at the moment, and Pakistan is one of the worst affected due to a lack of effective monetary and fiscal planning. We have seen bailout packages in the past with short-term corrective measures but no long-term planning to improve the economy’s fundamentals. Insurance as a sector survives and grows with economic activity, so it will stay under duress until our economy stabilizes. Revenue might increase because of currency devaluation, but real growth will stay negative until economic activity revives.

TPL Insurance has a diversified portfolio with multiple products and customer segments. Therefore, we look to keep growing our pie in the insurance industry whilst continuing to develop the uninsured target segments.

BRR: How do you see the future of Takaful insurance evolving in the industry?

AHZ: With improved penetration in the retail segment, takaful will grow naturally, as we have seen in Islamic banking. We only need the right products and customer service attitude in the takaful sector, and customers will be inclined to get coverage in the takaful segment.

BRR: How do the Takaful insurance model handle claims and risk management?

AHZ: Internationally, the Takaful market is evolving, which is a testament to the fact that takaful is becoming successful globally. Takaful trust formed locally becomes part of these re-takaful players for improved risk management. Claims are handled in a similar manner where the participants lodge or intimate the claims to the takaful trust. The manager of the takaful trust is responsible for adjudicating and settling the claim as a trustee.

BRR: Contrary to conventional methods of selling insurance, what is TPL's game plan to attract and inform customers? Could you tell us what will be your marketing and branding strategy going forward?

AHZ: TPL Insurance decides on the distribution method based on product and target segment. We have different approaches and strategies for corporate, retail, and micro-segments. Therefore, we have a field force in all major cities of Pakistan, mobile apps and web platforms that are promoted through digital marketing, partnership, and integrations with banks, aggregators and other digital platforms for real-time policy issuance and a 24/7 contact centre.

Our resolve is to improve insurance penetration in Pakistan which we believe is only possible with focus and dedication towards developing the retail insurance segment in Pakistan and providing innovative solutions tailored for our market.