Aamir Khan, the Commissioner of the SECP for Information Technology and Insurance, said that the organization’s five-year plan for the insurance sector aimed to use technology to take use of Pakistan’s vast unrealized insurance potential.
At the Insurtech Conference 2023, he was giving a speech on the important topic of innovation through technology use in Pakistan’s insurance industry. The conference was hosted by Pakistan Fintech Network. The meeting was attended by experts, board members, and all CEOs in the insurance industry.
Pakistan’s insurtech industry, according to Khan, is still quite young. He emphasised that less than 1% of all premiums written go towards the Insurtech sector. Even though this statistic is unfavourable, it is nevertheless true. Insurtech firms increased from 1,500 in 2018 to over 3,400 globally by 2023.
Considering the aforementioned, SECP’s insurtech strategy aims to improve customer experience through personalization, boost operational effectiveness, lower risk, employ data-driven decision-making, and ultimately raise insurance penetration. Khan stated that SECP has been aiding in the fusion of technology and insurance in accordance with these important objectives.
Grand View Research estimates that the worldwide insurtech market would be worth $5.4 billion by 2022. A revenue estimate of $152 billion is projected for 2030. Pakistan possesses immense potential to emerge as a rising star in the fintech and insurtech industries. In the nation, there are 190 million mobile users. According to Aamir Khan, this, along with the 130 million people who use the internet, allows insurtech to explore countless possibilities.
Out of 30 million registered automobiles, barely 3 percent of cars in Pakistan are insured. Similarly, there are just 8 million individual life policies out of a population of 220 million. An estimate places the total number of farmers in the nation at around 8 million. Less than a million farmers, however, are protected by any kind of insurance.
Just 0.3 million of the 32 million properties that have been registered are insured. This is the narrative of every industry, every field, and every kind of insurance. There will still be room in the market for new participants even if the 40 companies that are currently registered in Pakistan treble in number. Thus, it is evident that there is market potential in Pakistan’s insurance industry.
Khan acknowledged that there are insufficient finance and investment options; in the current climate, it is difficult for insurtech and fintech start-ups to acquire capital, investments, or skilled personnel. Nevertheless, insurance companies don’t seem to be very interested in utilising technology or investigating insurtech. The insurance industry’s boards and C-suite have either not publicly acknowledged the case or have not been persuaded to take it seriously.
The aforementioned deficiencies call for a determined and focused national push that goes beyond providing basic insurance coverage and leverages technology to create an effective insurance ecosystem.
According to Aamir Khan, the legislation pertaining to digital insurers were made possible by the regulatory sandbox provided by the SECP, which has enabled the testing of novel products and services. He urged the insurance sector to investigate the sandbox and talk with SECP’s insurance policy team about their ideas. He emphasised that investments in technology are necessary for the insurance industry as a whole because the recent boom in the digital lending market can be applied to the insurance industry as well.
Similar outreach can be done to the financially excluded by insurtech goods and solutions pertaining to pure protection, health insurance, parametric insurance, robo-advisory, etc. In addition to serving as a regulator, he promised the attendees that SECP would foster innovation and insurtech.