South Asia’s share in the global insurance market is presently low but seems to be on the rise as the centre of global economic activity shifts towards Asian economies, said, senior financial sector specialist at the Asian Development Bank (ADB) .
Speaking to a panel of journalists at the sidelines of the 2nd SAARC Insurance Regulators’ Meet, Chatterjee revealed that South Asia suffers from under insurance. However, activity in the insurance sector seems to be picking up momentum in the region after the global financial crisis in 2007.
“As countries in the region expand their industrial base and as people acquire more personal wealth, demand for insurance increases. However, lack of market-driven products, sound regulations and high premiums create a complex environment for insurers and the customers in the region,” he said.
“The growth in the insurance industry is related to a number of factors such as economic growth, industrial output and foreign investment inflows to the country,” he said.
Further, he said, personal and non-industrial insurance is growing in Pakistan with the country’s insurance regulator, Securities and Exchange Commission of Pakistan (SECP), eager to introduce viable policies to boost micro insurance. He went on to add that health insurance is very low in the region and needs to be increased.
“There are some challenges in the insurance sector in Pakistan as people have religious concerns. People are more likely to accept Shariah-compliant products,” said Chatterjee.
Insurance companies need to design market-friendly insurance products and ensure the cost-friednly distribution of insurance. “Underprivileged people cannot afford high premiums of insurance schemes. The companies should use mobile technology and make the products accessible for the customers.”
Chatterjee went on to add that agricultural insurance has potential in the region but has not successfully penetrated the market. “Some countries do not even offer subsidies to farmers,” he pointed out. Technology has a great role to play in expanding the penetration of insurance in South Asia, he said.
Meanwhile, Martin P Endelma, Principal Financial Sector Specialist at ADB, said the bank is assisting the government of Pakistan on the privatization of state-owned enterprises.