KARACHI: The United Insurance Company of Pakistan Ltd, a general insurance provider, announced on Monday it’s going to launch a life insurance business.

A regulatory filing said the proposed name of the entity will be The United Life Assurance Company Ltd. The parent company will invest up to Rs700 million in the proposed life insurance firm.

“Life insurance is a highly under-penetrated market in Pakistan. The penetration rate is one of the lowest in the region, which shows there’re opportunities for existing and new players,” said Amreen Soorani, head of research at JS Global, while speaking to Dawn.

Life insurance penetration, which reflects premiums as a percentage of GDP, has barely inched up in the last many years. It currently stands at only 0.6 per cent, significantly lower than prevailing rates in comparable economies.

As opposed to roughly 30 firms engaged in the general insurance business, only 10 life insurance companies operate in Pakistan. This is despite the fact that growth in the life insurance segment has been considerably higher than that in general insurance.

Life insurance is a “bundled proposition” in which people invest for 10 to 20 years for protection against death or disability while accumulating “disciplined savings” for a specific purpose like children’s education or retirement.

Traditionally, the customer focus in Pakistan has been on the savings aspect. That’s because the agency sales force of all life insurers invariably sells savings-oriented policies. Insurance sold through banks, commonly known as bancassurance, is also geared completely towards products that revolve around the savings aspect.

But the post-coronavirus years have made people more concerned about their future, according to insurance industry analysts.

Given the overwhelming size of three major players — State Life, EFU Life and Jubilee Life — in the life insurance business, smaller entities have found it increasingly difficult to carve out a bigger slice of the overall business pie for themselves.

According to the Securities and Exchange Commission of Pakistan (SECP), which regulates the insurance business, the private sector is “pushing up on its role” within the life insurance sector. As evidence, it cites the market share of State Life, which came down from around 70pc in 2010 to 51pc in 2021.

“The major contributor in any economy should by and large be the private sector. However, in the developing economies such as ours, public-sector entities have historically played a more dominant role... the concern of the SECP revolves around the financial stability of life insurers to meet their financial obligations, as and when they fall due, through the test of solvency,” it said in an earlier emailed statement to Dawn.

Published in Dawn, August 30th, 2022