The Securities and Exchange Commission of Pakistan (SECP) will launch microinsurance regulatory framework by June 2012. "We are working to prepare draft rules on microinsurance in consultation with the stakeholders", Muhammad Asif Arif, Commissioner (Insurance), SECP, said this while talking to media persons in connection with a seminar on 'Microinsurance' jointly organised by the SECP and Pakistan Insurance Institute here on Tuesday.
He said that the SECP has also sought support of the World Bank, and these draft rules are being prepared with the support of the WB and with the consultation of all stakeholders. He said that the main objective of forming these rules is to provide insurance cover to individual victims of natural disaster.
"In the recent past, thousands of people have been affected in floods, earthquakes and other natural disasters and terrorism but they did not have proper insurance cover", he said, adding that the SECP aims that all people should be provided proper and affordable insurance coverage that could support them and their families in case of any natural disaster.
He said that insurance penetration is very low in Pakistan, at a mere 0.7 percent of GDP, lowest in the region and it is anticipated that this initiative would help in creating a transparent and enabling environment, thereby doubling the insurance density, to 1.4 percent, in the next three years and affordable outreach to low-income people and alleviation of poverty.
He said that at present, insurance companies are providing their services only in big cities. It is a recognised fact that without servicing the insurance requirements of low-income people, the risks to economic development are not safeguarded.
This has also been proved by the recent floods in Pakistan where in the absence of proper insurance coverage, the economic losses suffered by the masses had a very adverse effect on the financial stability of the population at the bottom of the pyramid and the government's fiscal deficit.
While realising the needs of the microinsurance segment and the huge potential economic impact on the target community, the SECP initiated the dialogue with the insurance industry earlier. Speaking at the seminar, the SECP Commissioner emphasised on the areas including development of a regulatory framework for microinsurance, discussing the examples of viable business cases for microinsurance and recommending sustainable business models for microinsurance business.
Other speakers of the seminar included experts ranging from the international speakers from the World Bank to the senior officials of the local insurance companies and Pakistan Microfinance Network. The draft of rules on microinsurance is expected to be prepared very soon in consultation with the stakeholders. It is expected that after methodical deliberations and input from all stakeholders, the rules on microinsurance will be finalised and issued by the SECP.
"In Pakistan, where insurance penetration is a mere 0.7 percent of GDP, it is anticipated that this initiative will help in creating a transparent and enabling environment thereby increasing the insurance density and affordable outreach to low-income people, and alleviation of poverty", he said.
Eamon Kelly, Microinsurance Consultant, Finance and Private Sector Development Unit, South Asia Region, World Bank, gave a presentations on 'Client Value of Microinsurance' and on 'Business Case of Microinsurance', while Dr Jules Gribble, Director, Enterprise Metrics and Technical Expert on Insurance Consultant, World Bank, gave a presentation on 'Regulation of Microinsurance'.
Among other speakers, Mohsin Ahmed, Chief Executive Officer of Pakistan Microfinance Network, gave presentation on 'Microinsurance - The Micro-finance Bankers' Perspective'. Jave Ahmed, CEO of Jubilee Life Insurance, spoke on the topic of 'Microinsurance - The Insurers' Perspective', while Dr Mehdi Kazmi, CEO of Asia Care Health and Life Insurance, gave presentation on 'Microinsurance - The Insurers' Perspective'.
The CEO of Pak-Qatar Family Takaful, Pervaiz Ahmed, gave a presentation on 'Microinsurance - The Takaful Perspective'. The seminar was widely attended by major stakeholders including representatives of the SECP and State Bank of Pakistan, insurance companies and microfinance banks.