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| MD Speaks |
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Text
of an interview of Mr. Saifuddin Zoomkawala published
in Pakistan & Gulf Economist |
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PAGE: EFU Group
has majority stake in general, life and health insurance
companies. What role does an insurance company play
in the society? |
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Saifuddin Zoomkawala:
An insurance company helps in hedging various
types of risks with an objective of minimizing losses
of the clients. On top of this insurance companies
also provide and/or help in mobilizing resources
for the development of the economy of the country.
Therefore, the role of insurance companies can be
clubbed in two major activities 1) hedging risk
and 2) capital formation. |
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PAGE: How do
you define each role? |
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Saifuddin:
Our lives, capital, assets and businesses are exposed
to a variety of risks. Life of an earning member
of the family or business (agriculture, industrial
and commercial) has to be protected against natural
calamities. Assets, both moveable and immoveable,
have to be guarded against theft, fire and accidents.
Goods in transit and vehicles on roads are exposed
to accidents. All these risks need hedging and insurance
companies provide the best possible cover. While
providing the insurance cover, insurance companies
generate premiums of millions of rupees. After
keeping an appropriate amount for expenses etc,
insurance companies are still left with huge sums
at their disposal. This they have to invest somewhere
be it a bank deposit, investment in shares, corporate
bonds, real estate and government bonds. Often
they are also the key investors in pre-IPO and
IPOs. This way they provide the much-needed liquidity
to the capital market. |
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PAGE: Do they
play any role in the development of real estate
market? |
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Saifuddin:
Most of us are aware of the fact that insurance
companies own large commercial buildings. Among
the insurance companies State Life Insurance Corporation
(SLIC) owns the largest number of buildings. EFU
Group also owns two buildings one each at Karachi
and Lahore and New Jubilee Insurance Company has
one building in Karachi. In the past a life insurance
company also owned a number of prestigious building,
which are now owned by SLIC. Investment in real
estate on one hand helps in the development of prestigious
buildings and on the other hand become a source
of regular income and yields handsome gains when
sold. |
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PAGE: What role
insurance companies play in natural calamities? |
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Saifuddin:
Insurance companies insure lives as well as physical
assets and also provide health insurance. In case
of a natural calamity or catastrophe the first and
most important step is to help people recover from
mental and physical shocks. Then comes treatment
of injured. EFU Group is proud to say that it provides
insurance cover in the three key categories and
the added advantage is that EFU has a track record
of excellent performance. |
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PAGE: Can an
insurance company help in compensating the real
loss? |
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Saifuddin:
It is true that the real loss just cannot be compensated
but its impact can be minimized. In case of loss
of moveable/immoveable properties claims paid by
the insurance company could be close to the real
worth depending on the type of cover that is obtained.
However, there could be no compensation for the
loss of life of father/husband/son/brother. However,
the claim can help the family in recovering from
the shock resulting from loss of near and dear. |
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PAGE: How benefits
could be maximized? |
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Saifuddin:
Maximizing of benefits are dependent on the client
as well as the insurance company. A client can maximize
his/her benefits by acquiring the best cover. However,
some times in an attempt to save few hundred rupees
a client deliberately avoid getting a few cover
assuming that these eventualities may not be there.
This may help in saving a small percentage of total
payable amounts, but could cause a fortune. Similarly
a fully conversant insurance executive helps the
client in better understanding of the potential
risks. This type of understanding does not come
overnight. Professional qualification and expertise
plays the most important role in developing such
a reputation. |
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PAGE: Having
arrived at the conclusion that insurance sector
plays very important role one wonders why the overall
size of the sector is so small? |
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Saifuddin:
Lack of awareness about the benefits of the insurance
has kept growth of the sector subdued. Government
is still the largest player of the sector but amount
being spent on creating awareness is negligible.
As the regulator the government has also failed
in curbing the largest pilferage in the shape of
Third Party Motor Insurance. On top of this often
the laws have been bias against the insurance companies
be it tax on capital gains or reinsurance through
state owned entities. Lately, there has been pressure
on insurance companies to enhance paid-up capital.
However, raising capital alone cannot improve claim
payment ability of the insurance companies. Due
to lack of interest on the part of government agriculture
sector, contributing nearly 25% of Pakistan’s
GDP, remains a far cry. It is also true about health
insurance. It has not become a reality because average
disposable income is very low. Only big corportaes
provide some cover after incurring huge expenditures.
If their employees get health insurance they would
spend less and benefits to their employees would
be enormous. |
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PAGE: How well
does EFU groom its executives and agents? |
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Saifuddin:
EFU invests a lot in hiring and training. To begin
with, elaborate recruitment process helps in placement
of dedicated personnel and appropriate training
polishes their personality. And above all the comprehensive
understanding of the insurance business helps the
insurance executive protect the interest of client
to the maximum. We train our people to avoid being
pennywise pound-foolish. They convince the client
to pay a little more for the complete peace of mind.
They are the true propagators of our message –
EFU the Symbol of Security. |
