Insurance misconceptions debunked

Majority of Pakistanis display reluctance towards insurance, due to lack of accurate information

KARACHI:

A significant number of people in Pakistan exhibit hesitancy towards insurance, primarily stemming from a lack of information or misinformation.

 There is a need to address this issue by debunking misconceptions and increasing awareness about the importance and benefits of insurance. The Express Tribune, aiming to illuminate these concerns and empower individuals with knowledge for improved decision-making, recently organised a podcast titled “Insurance: myths and Perceptions”.

The podcast was hosted by Aisha Abrar and featured panelist Muhammad Aminuddin, Chief Executive Officer of TPL Insurance and an esteemed insurance expert. During the podcast, he elaborated on the multifaceted benefits of insurance, shedding light on its role in protecting assets, mitigating risks, and providing a safety net for loved ones in times of crisis. He emphasised that insurance serves as a crucial tool for managing financial uncertainties and achieving long-term goals.

Aminuddin divided insurance companies in Pakistan into two distinct categories: life insurance companies and non-life companies. Seeking to provide clarity on the differentiation, he further expounded on the concept of non-life companies, likening them to anything apart from human life.

He defined human life as the core focus of life insurance, encompassing policies that offer financial protection in the event of death, disability, or critical illness. On the other hand, non-life insurance comprises a wide range of coverage areas, extending beyond human life to encompass various assets and properties. He specifically cited livestock and cattle as instances where non-life insurance would come into play.

Furthermore, Aminuddin delved into the realm of insurance calculations, specifically pertaining to safeguarding fields and farming in the event of rainfall-related risks. Drawing upon mathematical principles, he shed light on the process of determining an appropriate insurance amount to protect agricultural interests.

In addition, he highlighted a notable gap in Pakistan’s insurance practices, specifically concerning car insurance. He pointed out that while vehicles are insured, little attention is given to determining the individuals who will be driving them. In contrast, he emphasised that in Western countries, insurers always inquire about the designated drivers, and the policy premium varies based on the driver’s profile.

According to the expert, the younger generation tends to possess a better understanding of the concept of insurance. He highlighted that with increased access to information, improved financial literacy, and growing awareness campaigns, young individuals are more adept at comprehending the importance and intricacies of insurance.

Concluding the discussion, the host urged viewers to remain informed about insurance matters and encouraged them to take proactive steps towards their financial well-being. Emphasising the importance of staying updated on insurance trends, policies, and options, the host highlighted that being well-informed empowers individuals to make informed decisions when it comes to their financial future.

Published in The Express Tribune, June 23^rd, 2023.