Interview with Mr Shoaib Javed Hussain — Chairman, State Life Insurance Corporation of Pakistan
PAGE: What are the current issues and challenges in the insurance sector of Pakistan and how this sector improve?
Shoaib Javed Hussain: Although the life insurance sector has grown over the past decade; the life insurance penetration rate, measured as the ratio of GWP underwritten in a particular year to the gross domestic product (GDP), remains extremely low at around 0.6%. This compares to a world average of around 3.5% and even higher countries like India and Malaysia.
The low rate indicates tremendous scope for expansion in Pakistan’s insurance industry. This is further indicated by Pakistan’s GDP per capita is far below the life insurance penetration inflection point, similar to other Asian economies such as India, Vietnam, Philippines, Thailand, and China. Inflection point for life penetration is USD 10,000 to 20,000 GDP per capita.
To maximize the growth opportunity, some key challenges for the sector need to be assessed. A few select challenges and opportunities include;
Distribution channels: Poor infrastructure, insufficient skills training, and paper-based processes can lead to inefficiencies in the sales and distribution process with poor customer engagement. Churning practices and mis-selling must be checked with proper measurement parameters to ensure the best product is proposed to meet the customer needs, subsequently improving persistency rates and minimizing financial loss.
Diversifying distribution channels (agency, bancassurance, direct, digital) will help the sector to increase its customer base, helping to increase sales volumes and penetration rates. Note that global industry experience supports that diversification of distribution channels does not lead to cannibalization of sales, but helps improve an insurer’s resilience to stresses.
A sales process that is clear, transparent, and not cumbersome, will help greater customer engagement and increase trust in the insurance sector.
Product innovation and mix: Ensuring product offerings meet customer needs is essential. In many insurance markets, the trend has been to copy/paste successful products across competitors. This reduces market innovation, product diversification, and an understanding of customer needs.
In Pakistan, due to income disparity, the need and affordability of insurance products will also vary significantly. Market segmentation would be key to understanding customer needs and ensuring appropriate product offerings. Understanding the needs of individual segments would help tailor products that meet respective needs, increase the customer base, and in turn increase premium revenue for an insurer. Market segmentation can also help differentiate pricing, and improve affordability.
Use of technology: Technology should be seen as an enabler to an insurer’s strategy. Customer engagement and retention can improve significantly through the use of digital tools.
PAGE: Under your leadership, State Life’s performance and results have been outstanding with a 100% growth in new business sales over 2021. What were the major elements that went into turning State Life around as an organization?
Shoaib Javed Hussain: State Life has a rich legacy of service and delivery across its 50-year history and it’s a matter of pride to achieve great results in its 50th anniversary year. The founding principle for State Life has been to “secure that life insurance business is developed to the best advantage of the community” and our focus remains the same. After all, we are the only insurer that distributes 97.5% of its profits to its policyholders.
The outstanding performance has been achieved due to adopting innovation and a strategy that ensures sustained future growth; while ensuring focus on the utmost value added to the policyholder.
Reinvigorating our dynamic sales force together with diversification across Banca, corporate and digital channels. Product innovation has been a key focus such as the Golden Endowment plan, which further increases the value for the customer. We have also launched our corporate and individual health and accident protection line with the focus of ensuring affordability for the wider population. This has also led to specialized products being launched such as Sinf-e-Ahan plan to provide protection to women against cancer, the Haari plan for farmer protection, and the child education policy.
Adoption of technology with digital products, and services for policyholders and improving internal processes and controls.
The focus for us is to enhance the overall insurance ecosystem in Pakistan, to ensure protection at affordable prices, and increase in insurance penetration rate.
PAGE: State Life has served the people of Pakistan over the past 50 years. In the current situation, especially the flooding crisis, what has been State Life’s response?
Shoaib Javed Hussain: Recent developments such as the pandemic and other events certainly have had a financial impact on the individual. We have brought in revival policy schemes to help our policyholders manage premium payments and waive off late fee charges; offered loans against policy values to help meet needs during these uncertain times and we have been very focused on ensuring claims and benefits, are paid out in a timely manner. In 2021, State Life paid nearly Rs 100bn in claims alone.
The floods have been unprecedented and a national calamity. As a national corporation and Pakistan’s largest life and health insurer, we feel duty-bound to serve the people of Pakistan at this time of need. We have set up medical camps across the country to provide medicines, consultation, female hygiene, child nutrition, and water purification products free of cost. In the first phase, nearly 50 camps have been set up across Pakistan, with each camp managing over 1,000 patients on a daily basis. Nearly 20,000 patients have been treated in the first phase and we are about to launch the second phase across the country.
State Life has deployed its own doctors and paramedics to provide the services at these camps. And our own employees and sales force have volunteered to coordinate and assist the affectees at these camps. We intend to continue expanding our efforts in the coming days to further support our affected countrymen in this time of need.
PAGE: Do you feel there is a leadership crisis in Pakistan, and how can we overcome it?
Shoaib Javed Hussain: In the light of my own experiences in various countries, I can say with utmost confidence that Pakistanis can be counted among the most talented people in the world, and are being offered leadership roles in the corporate as well as non-corporate organizations across the world.
Unfortunately, on account of the massive brain drain taking place in Pakistan for quite some time, we have been unable to benefit from the remarkable leadership qualities of our fellow countrymen. I believe that our government and corporate sector should join hands to create a conducive environment in which our highly talented expatriates can feel physically and financially safe and secure. We also need to enable the mobility of resources and talent so that available opportunities are optimized.
Similarly, Pakistan has some fine universities across sciences, arts, and business fields. Programs that may help retain the talent as they graduate from these universities are key. Apprenticeship programs may also go a long way in retaining and developing Pakistan’s talent. Having said this, we must also recognize some of the great young leaders that are here and contributing progressively and a great example is our fintech, freelance, and start-up industry.
PAGE: What cultural differences did you come across while working abroad and in Pakistan?
Shoaib Javed Hussain: While working with multinational companies, I noticed a tremendous team spirit prevalent in their employees. Regardless of cultural differences or geographical distances, they were closely connected and worked tirelessly and collectively for the achievement of their organizational goals. This creates a culture and a holistic view that enables people to rise above any individual interests, see the bigger picture, and work collectively as a team to achieve common goals for the greater good.
In fact, one’s own goal implicitly becomes part of achieving the wider vision. This is something I believe we can bring more to Pakistan. A society where people display a progressive attitude, with more emphasis on “we” rather than “I,” will naturally lead to benefits across all strata of society.