Pakistan

ET podcast seeks to dispel myths about insurance for common man

In Pakistan, the penetration of insurance is less than 1% of the total population. So where does the resistance lie?

Ariha Fatimah February 11, 2023

KARACHI:

The penetration of insurance in Pakistan is less than 1% of the total population, and a major reason for this low adoption rate is the widespread myths and misconceptions about insurance among the general public. In an effort to shed light on these issues and help the common man make better-informed decisions, The Express Tribune recently hosted a podcast titled "Insurance: Myths and Perceptions."

The podcast was hosted by Sidra Iqbal and featured panelists Zahid Barki, Group Head of Risk Management, Compliance and Quality Assurance at Jubilee Insurance, and Mubashir Naeem Siddiqui, Director General of the Federal Insurance Ombudsman Pakistan. The guests explored why the common man is hesitant about insurance and what the prevailing misconceptions about insurance policies are.

One such myth is that insurance policies are a mode of return or investment, when in reality, they are a savings avenue. Barki described insurance as "a risk transfer vehicle that mitigates the risk of financial loss." Another myth is that insurance policies return twice the amount insured. However, insurance products cannot return more than the growth of the economy, and in the long term, returns depend on the amount invested.

Another common perception is that the contract of insurance is a contract of guarantee, when in reality, it is a contract of indemnity. Health insurances cover costs incurred due to sickness, disability, or death, and there is also an option for non-medical insurance. Disputes over the true heir to insurance benefits after the holder's death are also common, and such matters are taken to court to issue the succession certificate and make insurance payments.

People also have the perception that the process of claiming and receiving insurance payments is lengthy and tedious. In reality, if proper documentation is available, the case should be settled within 90 days as stated by law. The panelists also noted that the gender bias in insurance policies has diminished over time, and the cost of insurance depends on factors such as age, health condition, and declarations.

In conclusion, the podcast sought to dispel common myths and misconceptions about insurance and provide the common man with a better understanding of the insurance industry. The guests emphasised that insurance is an amalgamation of savings and protection, and with the proper information, people can make informed decisions about their insurance needs.

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