Saifuddin Nooruddin Zoomkawala is the Chairman of EFU General Insurance Limited, Chairman of Allianz - EFU Health Insurance Limited and Director of EFU Life Assurance Limited. Having spent most of his professional career with the company, Zoomkawala has risen through the ranks from sales representative to the helm of affairs. BR Research recently met up with the industry veteran. The following transcript is based on key takeaways from that meeting.
Brief history of the company Prior to the independence of Pakistan, Quaid-e-Azam Muhammad Ali Jinnah and other prominent Muslim leaders of the Indian sub-continent urged Muslims to pursue higher education and enter into the financial and manufacturing industries.
In this vein, they also encouraged influential Muslims to play a role by investing in new business ventures that could create employment opportunities for Muslims and also erect sustainable economic structures. In response to this emergent need, Eastern Federal Union Insurance Limited emerged in 1932 through the efforts of Ghulam Muhammad. He was aided in this endeavour by the Nawab of Bhopal and the Aga Khan III. Abdul Rehman Siddiqui became the founder chairman of the new company, which was registered in Calcutta.
The company continued to expand over the years. After the independence of Pakistan, its head office shifted to Chittagong, in then-East Pakistan. By 1971, the company had grown to become the largest insurance company in the Afro-Asian region. In subsequent years, the company faced certain challenges. The Fall of Dhaka affected it given that a significant portion of the portfolio had been in that part of the country. A few years later, when the Government of Pakistan decided to nationalise large industries, a large chunk of the company's life insurance portfolio went into what later emerged as the State Life Insurance Corporation.
Through such tumultuous times, EFU has persevered to remain one of the most significant players in the insurance sector of Pakistan. Replacing the visionary leader, Roshen Ali Bhimjee at the helm of affairs, came Saifuddin Nooruddin Zoomkawala.
On expanding insurance penetration in the country
Chairman EFU General Insurance highlighted three major hurdles to the growth of the insurance industry in the country: low incomes, religious considerations and lack of awareness. He highlighted the need for concerted efforts by the industry, regulator and other stakeholders to raise awareness regarding the utility and usefulness of insurance.
The industry veteran pointed out that insurance companies in the country should be encouraged by the regulator to split their operations into two separate departments; corporate and retail. At present, since all insurance companies operate both sets of clients in the same department, senior managers are predominantly focused on expanding their corporate portfolio because the size of the policies and the consequent revenue stream is much higher, per client as compared to individual clients.
If the companies were to split their operations along the two heads; they would have separate departments dedicated to increasing the number of individual policy holders. They would also devote more energy towards raising awareness among individuals and pursuing prospective clients.
When asked about the growth prospects for general insurance and life insurance in the country, Zoomkawala stated that life insurance enjoys better growth opportunities. He explained that this is because life insurance policies are longer term policies and that once a client is acquired, he or she is more likely to continue contributing towards the policy over subsequent years. By comparison, general insurance policies are usually over shorter tenures and are pre-dominantly acquired by corporations for their properties and other assets and also on behalf of their employees.
On growth of general insurance in the country The general insurance sector's performance is strongly correlated to economic growth. Since the economic situation in the country has been jittery in recent years, the performance of this sector has also moved in tandem. However, some sectors have continued to provide lucrative business opportunities to the sector. Zoomkawala highlighted that textile and power sectors are major growth drivers of the past three years. He also stated that car leasing is on the rebound, having lying in the doldrums over the past couple of years.
The industry expert contended that the growth of general insurance on the country can be spurred through government's enforcement of existing laws; particularly in the case of vehicle insurance. He explained that a vast majority of vehicles on the country's roads are not insured and that most vehicles operating in public transport and good transport sectors are getting away with fake insurance certificates with the connivance of law enforcers.
He said if the government was to clamp down against unscrupulous practices, hundreds of thousands of clients would head towards the country's insurance firms. Such an initiative by the authorities would also help improve road safety in Pakistan. Similarly, he pointed out that very few citizens have health insurance cover. If legislation is implemented to ensure that employers provide either complete, or partial assistance to their employees for health insurance, not only would health insurance penetration increase, the country's workers would also be better equipped to access healthcare services. Saifuddin Zoomkawala asserted that significant foreign investments can be attracted to the insurance sector in the country, if requisite government action can help open up avenues for expansion in health insurance and vehicle insurance.
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