life insurance in pak,past prsent
TRANSCRIPT
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
LIFE INSURANCE IN PAKISTAN
Past ,Present and Future
Presented byJamshaid Islam, FSA, FPSA
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
1956 1961 1972 1984 1987 1992 2000 2002 2005
India: LIC Act
Sri LankaLife InsuranceNationalized
BangladeshBINO
Pakistan: LINO
BangladeshPrivate SectorLife Insurance
CompaniesAllowed
Sri LankaPrivatization
of Insurance
PakistanPrivate SectorLife Insurers
Allowed
Sri LankaRegulation of
InsuranceIndustry Act
Pakistan
InsuranceOrdinance 2000
IndiaIRDA Act
PakistanInsurance Rulesand Insurance
AccountingRegulations
PakistanTakaful Rules,
VoluntaryPension Rules,
Valuation
Regulations
Life Insurance History in Indian Subcontinent
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
2003 - Type of Business
Individual Life
Pension
Accident &
Health
Group Life
Source: Published Accounts
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
2003 - Unit Linked vs. Non Unit Linked
Source: Published Accounts
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
2003 - Unit Linked vs. Non Unit Linked
Source: Published Accounts
Private Sector
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
2003 ² Group Life
Source: Published Accounts
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
2003 ² Group Life Private Sector
Source: Published Accounts
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Product Development 1947 - 1972
Dominant type of plans:
Whole Life Assurance
Endowment Assurance�Limited payment
�Anticipated endowments
Annuities were also offered
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Product Development 1972 - 1992
Product ´basketµ initially offered by State Life ² basedon plans offered by the pre-nationalisation companies
W hole Life
Endowment Assurance
Anticipated Endowment
Progressive Premium
Optional Maturity
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Innovations in the PakistaniPakistani insurance market
UUnit llinked PProducts
IInflation PProtection
CComputer IIllustrations for BBenefits
EEducation PPlanning SService
CCritical IIllness PProduct
Product Development 1992 Onwards
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Since creation of Pakistan insurance business wasregulated under the ´Insurance Act 1938µ
Insurance sector reforms in 1990s
Securities and Exchange Commission formed in 1999
Insurance sector reforms in collaboration with theAsian Development Bank
New Insurance Law ² Insurance Ordinance 2000Insurance Rules 2002Accounting Regulations 2002
Insurance Regulatory Environment
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Insurance Ordinance 2000
Capital and Solvency Margin requirements
Separate Statutory Funds for different classes of business
Admissibility of Assets
Role of the Appointed Actuary
Financial Reporting
Market Conduct Rules
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Competitive Forces
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
The Future
Takaful
�Government has taken keen interest in promotingIslamic modes of banking, investment and
insurance
�Recently the SECP created a Task Force to draftTakaful Rules ² current regulations do not cater toTakaful products.
�Individual life Takaful products will primarilyfollow the unit linked structure
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Window operations for Family Takaful allowed -separate statutory fund required
Takaful operational model based on the principle ofWakalah. The Participants Takaful Fund may be
based on the principle of Waqf. The investment offunds in the Participants Investment Fund may bebased on the principle of Wakalah, Modarbah orcombination of both
Retakaful placement with conventional reinsurersallowed in case sufficient capacity not available
Shariah Board
Draft Takaful Rules
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
1996 2001 2002 2004
Depositor·sInsurance
Credit Life Mail Inserts BancassuranceAg reements
The Future
Bancassurance evolution
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
5 banks offering credit life on group basis - premiumseither explicitly charged from customer or paid by thebank from product margins.
2 banks have commenced telemarketing of insurance
products ² personal accident and critical illness products.
2 banks have entered into bancassurance agreements ²products offered: personal accident, unit-linked lifeassurance
Agency system of bancassurance model being followed
Expected to grow rapidly in 2005
Bancassurance
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
The Future
Voluntary Pensions System
SECP has drafted Voluntary Pension Rules
Life Insurers and Mutual Funds allowed to operateas Pension Fund Managers
Main competition in this market with Mutual Funds
Currently mutual fund industry has assets over Rs. 1trillion
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Cap on front end fee (3%) and investment management
charge (1.5%)
Contribution limit and tax allowance to be set in income taxrules
Tax penalty on withdrawal before age 60. After age 60, canwithdraw 25% as lump sum and the remaining to be paidas an annuity purchased from a life insurance company
Two sub funds to be created ² Equity and Debt
Benchmark for investment performance ² weighted averageof all sub funds less 2.5%
Voluntary Pension System Rules
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
The Future
New Life Companies
Major banking groups intend launching lifeinsurance companies
Already have a viable distribution channel
Takaful companies
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Pakistan Society of Actuaries 7 th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
Role of Actuaries in a changing market
�Active involvement of the actuarial profession
�In an evolving market actuaries have to be broadbased business professionals and cannot confinethemselves in ´specializationµ silos
�Critical role for the actuarial profession to act as abridge between the industry and the regulator
�More communication and interaction betweenregional actuaries bodies
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Pakistan Society of Actuaries 7
th
Global Conference of ActuariesLife Insurance in Pakistan ² Past, Present & Future New Delhi 2005
LIFE INSURANCE IN PAKISTAN
Past ,Present and Future
Presented byJamshaid Islam, FSA, FPSA