The potential of Pakistan’s insurance sector
CEO MetLife Alico says the size of the insurance industry in Pakistan is going to double over the next five years,
KARACHI:
The size of the insurance industry in Pakistan is going to double over the next five years, asserts Arif Sultan Mufti, Chairman and CEO of MetLife Alico, formerly known as American Life Insurance Company (Pakistan) Limited.
“I believe that the size of local insurance industry will double, just as it has doubled over the last five years. With annual growth exceeding 30 per cent, the industry has tremendous potential,” says Mufti in an interview with The Express Tribune.
Talking about the limited popularity of the insurance industry in the country and meeting local targets, he said that the company has been working on new products which will be offered in coming months. However, he was quick to point out that selling life insurance policies is a face-to-face activity which requires trained professionals.
“Today, all private insurance companies need a trained workforce like State Life which operates with a 100,000-member strong field force,” he added.
State Life, a public sector company, enjoys a dominant position in the sector with more than 70 per cent of the market share. Meanwhile, MetLife Alico has a market share of just four per cent.
More interestingly, it is estimated that in a country with a population exceeding 160 million, insurance penetration is less than 0.3 per cent — representing the extent of the untapped market.
“The biggest challenge for private insurance companies is to develop a trained field force that can reach people and make them understand the importance of savings and investments through insurance,” says Mufti.
Referring to a major impediment to the sector, Mufti highlighted that inflation was not good for business as it eroded disposable income.
About the deal
“It is a complementary and magical fit,” says Mufti about the recent acquisition of Alico by Metlife.
Both companies deal in life insurance, complementing each other’s services. The two also enjoy long-term relationships with international banks, making it easy to operate on a global scale.
MetLife acquired Alico for $16.2 billion on November 1, bringing together two insurance giants with a combined experience of 230 years. “MetLife Alico is now the world powerhouse with strong footprints in 64 countries,” boasted the CEO.
Alico first started its operation in Pakistan in 1952 and continued until 1972, when the government nationalised the life insurance industry. After denationalisation, it became the first foreign life insurer to be granted a licence in 1994 to operate in the country. According to Mufti, the company has recorded growth of almost 35 per cent during the first nine months of this year alone.
Published in The Express Tribune, November 5th, 2010.
The size of the insurance industry in Pakistan is going to double over the next five years, asserts Arif Sultan Mufti, Chairman and CEO of MetLife Alico, formerly known as American Life Insurance Company (Pakistan) Limited.
“I believe that the size of local insurance industry will double, just as it has doubled over the last five years. With annual growth exceeding 30 per cent, the industry has tremendous potential,” says Mufti in an interview with The Express Tribune.
Talking about the limited popularity of the insurance industry in the country and meeting local targets, he said that the company has been working on new products which will be offered in coming months. However, he was quick to point out that selling life insurance policies is a face-to-face activity which requires trained professionals.
“Today, all private insurance companies need a trained workforce like State Life which operates with a 100,000-member strong field force,” he added.
State Life, a public sector company, enjoys a dominant position in the sector with more than 70 per cent of the market share. Meanwhile, MetLife Alico has a market share of just four per cent.
More interestingly, it is estimated that in a country with a population exceeding 160 million, insurance penetration is less than 0.3 per cent — representing the extent of the untapped market.
“The biggest challenge for private insurance companies is to develop a trained field force that can reach people and make them understand the importance of savings and investments through insurance,” says Mufti.
Referring to a major impediment to the sector, Mufti highlighted that inflation was not good for business as it eroded disposable income.
About the deal
“It is a complementary and magical fit,” says Mufti about the recent acquisition of Alico by Metlife.
Both companies deal in life insurance, complementing each other’s services. The two also enjoy long-term relationships with international banks, making it easy to operate on a global scale.
MetLife acquired Alico for $16.2 billion on November 1, bringing together two insurance giants with a combined experience of 230 years. “MetLife Alico is now the world powerhouse with strong footprints in 64 countries,” boasted the CEO.
Alico first started its operation in Pakistan in 1952 and continued until 1972, when the government nationalised the life insurance industry. After denationalisation, it became the first foreign life insurer to be granted a licence in 1994 to operate in the country. According to Mufti, the company has recorded growth of almost 35 per cent during the first nine months of this year alone.
Published in The Express Tribune, November 5th, 2010.