ISLAMABAD: The total premiums for insurance distributed through digital channels stood at Rs842 million in 2023 against total Rs553 billion premiums, reflecting less than one percent of total premiums.
The Securities and Exchange Commission of Pakistan (SECP) has published the findings of its survey on “Mapping the Existing Digital Infrastructure of Insurance,” which provide critical insights into the current state of digitalization in Pakistan’s insurance sector.
Out of 29 non-life insurers, only 10 companies are offering one or more insurance classes through their websites.
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In life insurance sector out of 11 life insurers, 7 companies are offering digital distribution of their products through their websites. However, the number of products offered are very limited and the overall process breaks down at multiple points.
The insurance companies have not fully realized the impact of mobile apps, as only 10 non-life insurers and 7 life insurers have mobile apps. These apps are designed to cater the needs of existing policyholders in most cases and do not serve as an innovative distribution line to develop new products and attract fresh policyholders.
The overly conventional insurance sector has initiated digital distribution through websites, mobile apps, insurtechs, affinity platforms, banking apps, and digital wallets but this collaboration is in very nascent stage and so far, their contribution towards enhancing insurance footprint remains minimal.
The report revealed that the insurers in globe are heavily offering data-driven products however, in Pakistan only 2 companies are offering data-driven products that too at a very limited scope. Currently just tracker data and satellite data is being used for data-driven products.
Similarly, the usage of Artificial intelligence as minimal as data driven products as only 3 out of 40 companies are leveraging AI and ML in some ways.
While drawing comparisons between Pakistan’s insurance industry and that of other jurisdictions, the survey identifies areas of progress and those that are neglected. It indicates that the insurance industry is still in its infancy stage of digitalization, evidenced by only a few companies starting their digital journey and digitalization efforts being primarily focused on the distribution side. As such, majority of companies have yet to take significant steps towards digitalization.
Based on this comprehensive analysis, SECP published a report titled “Insured Pakistan through Digitalization: Gaps, Potential & Roadmap”, which outlines the roadmap to be followed in order to meet the objectives of the Insured Pakistan 5-year Strategic Plan.
The roadmap outlines Pakistan’s insurance sector’s digital infrastructure, integrating past and future initiatives with the national strategy. It also includes repositories for motor, health, inclusive, and national-level crop insurance programs, as well as digital portals for coinsurance and reinsurance payment and settlement, acting as an insurance clearing house.
Moreover, SECP is evaluating the concept of a centralized insurance information bureau to provide an overarching governance framework for these initiatives and is also working on amending the Insurance Ordinance to improve the regulatory framework and support digital infrastructure.
SECP’s Commissioner Insurance, Aamir Khan, in his message stated that the current state of digitalization requires immediate attention from all stakeholders. While the SECP is committed to modernizing Pakistan’s insurance sector, other stakeholders must join forces and advance toward a comprehensive digital insurance ecosystem.
Copyright Business Recorder, 2024
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