ISLAMABAD: The National Assembly Standing Committee on Commerce, has approved divestment of 20 percent shares of State Life Insurance Corporation of Pakistan (SLIC) with the proposal that the government converts it into a welfare entity and start insurance of crops and livestock.
The Committee presided over by Jawed Hanif Khan, MNA also approved substantial increase in fee of Trade Associations being register with the Directorate General Trade Organizations (DGTO). Testifying before the National Assembly Standing Committee, Chief Executive Officer (CEO), gave a detailed presentation on the slides to the Committee Members along with historical perspective.
The SLIC is on list of active entities which are to be privatized in the second phase. However, Secretary Commerce, Jawad Pal clarified that only 20 per cent stake of SLIC will be divested through the proposed transaction.
SLIC stands on a strong footing with 2024 half-yearly results
In 2023, cash dividend paid to GoP was Rs 2.50 billion whereas retained profit for paid capital increase was Rs 2.21 billion. Solvency reserve-ledger D was Rs 10.01 billion while Rs 119.70 billion bonus was allocated to policyholders. New equity was Rs 49 billion, new PIB+ T bills stood at Rs 344 billion, whereas other investments in assets was around Rs 1.538 trillion. It was revealed that about 97 per cent profit of SLIC is distributed amongst the policyholders.
During discussion, Chairman Standing Committee and MNA, Dr. Mirza Ikhtiar Baig recommended that SLIC must start insurance of crops and livestock and convert itself into a welfare organisation so that the middle income and upper middle income groups can benefit from its areas of coverage. They also stated that the Committee is ready to extend all possible cooperation in amending the rules of SLIC.
Committee members argued that since the procedure of insurance companies is cumbersome, there is a need to review it and make it simple for the general public.
According to CEO of the company based on BoD’s directives, over the next 12 months’ management will explore feasibility analysis for establishing the following: asset management company, life reinsurance company, digital software house and real estate management company.
He further stated that imposition of provincial sales tax on life insurance premiums is affecting policyholders and overall penetration rates, adding that minimum tax on gross turnover treats insurers similar to policyholders, leading to financial strain.
Committee member Gul Asghar Khan proposed that SLIC should invest in IT Parks as these can extend substantial financial benefit to the company.
The CEO of SLIC noted that insurance generate only 0.6 per cent of GDP, significantly lower than the global average of 2.8 per cent, which indicates an 80 per cent untapped market, highlighting substantial opportunities for organic growth.
Special Secretary Commerce said that in Pakistan culture of insurance coverage is almost negligible. He cited examples of buildings in Sindh government which burnt two to three times but there is no coverage so far.
Members of the committee also registered complaints against private sector insurance companies which are making money but not sharing benefits with the policyholders.
The committee was also briefed about the functions and performance of DGTO. MNA Mirza Ikhtiar Baig requested Director General Usman Qureshi to give time to business community visitors.
It was proposed that Commerce Ministry should enhance the budget of DGTO to improve its performance.
The Committee proposed revisiting the outdated licensing fee structure, which had not been revised since 2006. Members suggested categorizing fee based on chamber size to ensure that DGTO funds align with the scale of operations. The revenue generated would significantly support DGTO’s mandate, currently constrained with only Rs. 400,000 in funds.
In reply to question, DGTO said that a hearing about PSMA’s controversial elections has been held and a decision in this regard will be issued in a couple of days.
Responding to the committee, Minister for Commerce, Jam Kamal Khan said whatever proposal Commerce Ministry sends to the Finance Ministry for increase in allocation, the latter slashes the existing budget instead of increasing it.
The committee also decided to write letter to the Speaker National on nomination of a committee as Member of TDAP Board without seeking its concurrence. The meeting was attended by MNAs Mirza Ikhtiar Baig, Farhan Chishti, Rana Mubashir Iqbal, Gul Asghar Khan, Usama Ahmed Mela, Tahira Aurangzeb, Kiran Haider in person whereas, MNAs, Asad Alam Niazi and Muhammad Ahmed Chatha attended the meeting virtually.
Copyright Business Recorder, 2024