PHOTO: REUTERS
KARACHI: Although insurance penetration remains negligible in Pakistan, the number of complaints lodged by policyholders against insurance companies has grown exponentially over the last couple of years.
“The percentage of cases lodged during 2015 was 120% in comparison to the preceding year. In 2016, the complaints received till May show a 200% increase over the corresponding period of 2015 and 350% increase over 2014,” said the Federal Insurance Ombudsman in its annual report for 2015-16.
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The ombudsman received 839 complaints against majority of the companies operating in the country in 2015-16. Surprisingly, 70% of those were lodged against life insurance firms.
The second and third highest number of complaints was against general insurance and auto insurance companies, respectively. The complaints included an insurance firm making only eight monthly claim payments against the committed 12 after a policyholder (a PIA pilot) was temporarily disabled in 2011.
In another case, insurance firms changed the address of an insured factory in policy documents after it caught fire to avoid making payments and eventually did not make payments against the property damaged, the report added.
With increase in the number of complaints, the ombudsman also stepped up the judgment-giving process. “The number of cases disposed of was 200% higher (in 2015) in comparison to the previous year. In 2016, the complaints disposed of till May registered a 150% increase over the corresponding period of last year,” the report said.
The ombudsman received a cumulative claim amount of Rs1.89 billion against all complaints, ie 839. Of this, the ombudsman gave monetary relief worth Rs410.78 million to the parties.
Majority of the policyholders lodged complaints from Karachi. Lahore and Islamabad were the two other big cities from where the policyholders filed complaints.
Insurance density
Pakistan has more than 50 insurance companies including Takaful (Islamic insurance) firms dealing with life and general insurance business in the private sector.
The ombudsman received almost two-thirds of complaints against 39 companies and the remaining one-third against other companies.
According to the report, the insurance penetration and density in Pakistan is still at “the lowest level compared to similar countries in the region”.
Industry officials say the ratio of insurance penetration in Pakistan stands at 0.5% of gross domestic product (GDP) compared to 2.6% in India.
The ombudsman report suggested that “fathoming the depths of demographic structure of Pakistan for increasing penetration of insurance business is the key to development of this important sector”.
State firms
The report prodded the government into amending the Insurance Ordinance 2000 to bring state-owned insurance companies into the fold of insurance ombudsman, an exclusive forum that addresses grievances of policyholders in an efficient and speedy manner. In the public sector, there are four companies namely State Life Insurance Corporation, National Insurance Corporation, Pakistan Reinsurance and Postal Life Insurance.
According to the report, the ombudsman is facing the challenge of extending the outreach by establishing regional offices in Quetta and Peshawar as per directives of the president of Pakistan.
Published in The Express Tribune, December 25th, 2016.
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