The Securities and Exchange Commission of Pakistan (SECP) has called upon the insurance sector to harness the power of technology and tap into the vast untapped potential within the country. Commissioner of Insurance and IT, Aamir Khan, unveiled a comprehensive five-year strategy plan in this regard.
He revealed the plan while speaking to the Insurtech Conference 2023, organised by Pakistan Fintech Network to deliberate upon the critical theme of innovation through use of technology in Pakistan’s Insurance sector. All the insurance CEO’s, members of boards and experts attended the conference.
He informed that the current state of Pakistan’s insurance sector’s indulgence in technological routes is poor, constituting less than 1% of the overall premiums written.
Mr Amir Khan expounded that globally the insurtech sector has experienced substantial growth, with over 3,400 insurtech companies in 2023 compared to 1,500 in 2018, and at least 30 unicorns in the insurtech space, Pakistan’s potential remains largely untapped.
He told the attendees that according to Grand View Research, the global insurtech industry was valued at $5.4 billion in 2022. The revenue forecast for 2030 is $152 billion.
With 190 million mobile users and 130 million internet users, the country stands on the cusp of insurtech innovation, yet significant gaps in insurance coverage persist.
Aamir Khan, Commissioner Insurance at SECP, emphasised the infancy of Pakistan’s insurtech industry. However, he expressed confidence in Pakistan’s potential to contribute substantially to the global insurtech market. He underlined the country’s vast mobile and internet user base as fertile ground for insurtech innovations, suggesting a potential contribution of $1 billion to the projected $152 billion insurtech industry by 2030.
One of the primary objectives of SECP’s insurtech policy is to enhance customer experience through customization, increase operational efficiency, mitigate risks, implement data-driven decision-making, and consequently boost insurance penetration in the country. Khan acknowledged the challenges faced in Pakistan, particularly limited financial literacy and scarcity of funding. However, he also emphasised the immense potential, citing the presence of 190 million mobile users and 130 million internet users, providing a fertile ground for insurtech innovation. He noted that despite the widespread use of smartphones, digital literacy among Pakistanis remains limited.
SECP officials revealed startling statistics to the top management of the insurance sector. In a country with 30 million registered vehicles, only 3 percent were insured. Similarly, out of a population of 220 million, there are merely 8 million individual life insurance policies. Insurance products related to street crimes and terrorism are nearly non-existent, and less than one million out of an estimated 8 million farmers in the country are covered under any insurance policy.
However, there is a silver lining. The SECP informed insurance companies that there is room for significant expansion. All 40 registered insurance companies in Pakistan have the potential to double in number. The condition is embracing modern tools and introducing innovative products. To encourage innovation, the insurance sector was invited to utilise SECP’s regulatory sandbox, a platform designed for testing innovative products. The industry leaders were urged to explore the sandbox and collaborate with SECP’s insurance policy team, thus fostering a culture of innovation and advancement in the sector.
The importance of adopting technology in the insurance sector was stressed, citing the successes in digital lending as an example to replicate growth in the insurance sector. Insurtech products, such as pure protection, health insurance, robo-advisory services, and more, were highlighted as potential avenues to reach the financially excluded.
Aamir Khan assured support from SECP as both a regulator and a facilitator for innovation in the insurtech sector, emphasising the need for a concerted national effort to evolve beyond basic insurance coverage and embrace technology for an efficient insurance ecosystem.
