The Securities and Exchange Commission of Pakistan (SECP) is hosting the 2nd South Asian Association for Regional Cooperation (SAARC) Insurance Regulators Meet and International Conference from 14-16 April 2014 in Karachi, Pakistan with the theme “Local to Glocal”. Messrs Faraz Uddin Amjad and Syed Irfan Habib of SECP say the conference aims to bring together regional insurance market stakeholders and is expected to draw almost 500 participants.
Globally, the business of insurance is experiencing dramatic changes that pose unprecedented challenges both for insurers and regulators. The need is to seek greater efficiency through organisational and operational restructuring, stronger focus on core competencies and avoid the greater financial risks and uncertainties in the minds of various stakeholders.
The pace of development is prompting numerous regulatory and market reforms as there is a persuasive need to deliberate on the policy and regulatory issues to accommodate the market changes and bring stakeholders together to achieve greater collaboration.
A number of studies have shown the importance of robust insurance system for economic growth and social security of the masses. It has been found that there exists a robust causal relationship between insurance market activity and economic growth.
Both life and non-life insurance premiums have positive and significant effects on economic growth as these provide opportunity for long term capital formation. Also, the insurance activity contributes to economic growth by improving the financial system functions, both as a provider of risk transfer and indemnification and as an institutional investor. All this cannot be achieved without continued partnership, cooperation and collaboration of stakeholders for sustainable progress and growth.
“Local to Glocal”
Keeping this objective in mind, the Securities and Exchange Commission of Pakistan (SECP) is hosting the 2nd SAARC Insurance Regulators Meet and International Conference during 14-16 April 2014 in Karachi, Pakistan.
While the first event of this series was held last year in Bangladesh, it was proposed that Pakistan being one of the most prominent countries in the region, the SECP should host the second SAARC International Insurance Conference during early 2014 in Pakistan.
With the broad theme of this mega event, envisaged as “Local to Glocal”, it is expected to bring together more than 500 participants and experts from around the world who will exchange experience and discuss the challenges in insurance market development along with exploring perspectives on emerging risks.
The participants will include representatives of insurance and reinsurance companies, banks and financial institutions, insurance intermediaries, international development organisations as well as academicians, policy makers and the regulators.
The theme of the conference, Local to Glocal, has been carefully developed after detailed deliberations and brainstorming.
Glocalisation, which is a combination of globalisation and localisation, is a term denoting the adaptation of a product or service specifically to each locality or culture in which it is sold and is similar to internationalisation.
While keeping the changing dynamics of the regional insurance industry, the theme is quite relevant in the context of mutual development and growth of the regional insurance industry.
Key areas for discussion
The same is also reflected in the overall structure and organisation of the conference. Consorting with the conference’s theme, the key areas which will be touched upon include:
• Effective risk-based supervision and insurance market development;
• Microinsurance development and its role in financial inclusion;
• Catastrophe insurance and disaster risk financing;
• Role of insurers in financing infrastructure investment;
• Effective and efficient ways of regulatory compliance;
• Political risk insurance and its role in supporting foreign direct investment and trade;
• Significance of adequate reinsurance coverage;
• Role of donor organisations in insurance market development;
• Learning from the best insurance supervision models;
• Opportunities and challenges in takaful market development;
• Technology and alternate distribution channels;
Roundtable and workshop
On the sidelines of the conference, a roundtable inviting the insurance regulators and the development organisations will also be held to discuss the challenges and opportunities in the insurance regulation and how to increase the regional collaboration for effective market development.
A pre-conference exclusive workshop is also being organised with the support from the Asian Development Bank (ADB) which will provide learning coverage on the topic of “Promoting Proportionate Regulation and Risk-based Supervision” along with the sub-topics including IAIS Insurance Core Principles on solvency and related issues; Application of proportionality in practice; Calibrating risk-based capital requirements and supervision; and the Enterprise risk management.
The international event is an upshot of the strategic partnership between SECP, the World Bank and the ADB whereby the former has partnered with the two international development organisations with the aim of providing knowledge and increased collaboration among the local and regional insurance market stakeholders for enduring advancement.
Unique opportunity to network
The conference is specifically designed around providing a unique opportunity to network with participants from across the region, live plenary sessions and dynamic debates among the industry, regulators and policymakers of the region, knowledge exchange opportunities with regional counterparts, future partnerships building opportunities with exceptional array international trainers and speakers.
With more than 50 participating companies, over 500 expected delegates, more than 35 panellists and speakers along with more than 10 hours of exclusive networking opportunities and 20 hours of knowledge sessions, the conference is a must-attend event for the regional insurance supervisors and market participants who are not only interested in expanding their market footprint but also look forward to more relevant regional solutions for their local problems.
Snapshot of Pakistan insurance sector
The conference will also showcase the resilient and rapidly growing insurance market in Pakistan with business and investment opportunities for regional and foreign players.
According to the last reported annual financial figures of 2012, the total premium base of the insurance industry in Pakistan has been recorded at over PKR154 billion (US$1.5 billion) with annual growth rate of 17% while the insurance penetration and density have also witnessed an upward trend at 0.93% and $7.70 respectively as compared to 0.82% and US$7.22 respectively reported in the previous year.
The insurance market in Pakistan is also fairly liberalised as 100% foreign ownership and control of insurance companies is permitted with paid up capital requirements as $4 million, with the condition of bringing in at least a minimum of $2 million in foreign exchange and raising an equivalent amount from the local market. The minimum capital requirements have been increased in a phased manner, though they still remain attractive, at PKR300 million for non-life and PKR500 million for life insurers.
Untapped potential
The economy of Pakistan is seen as 27th largest in the world in terms of purchasing power parity (PPP), and 44th largest in terms of nominal GDP. The PPP-adjusted GDP per capita of Pakistan is recorded at approximately $2,900 in FY2013.
The finance and insurance sector contributed 5.2% in the overall services sector in FY2013. This sector recorded a growth of 6.6% in FY2013 against 1.0% recorded in the preceding year.
With fast expanding consumer base of more than 180 million population, there is a huge potential in financial services market development, including insurance. The current penetration level of 0.93% in insurance also shows the untapped potential of the insurance market in Pakistan.
The interest of foreign investment in the financial sector remains encouraging with nearly $1 billion of Foreign Direct Investment recorded in the FY2013 in the financial sector of Pakistan.
Mr Faraz Uddin Amjad is a Joint Director, and Mr Syed Irfan Habib is an Assistant Director, with the SECP.