COVID-19 for a Bright Future of Insurance and Agriculture in Pakistan:
Due to the COVID-19 pandemic, digitalization is expected to increase exponentially. COVID-19 reduced income, and uncertainty or fear hampered new business growth for existing players. Claims were added. Pakistan CEO BIMA discussed adaptability and pandemic solutions. They used a pay-as-you-go model and partnered with telecom operators, wallet companies, FinTech companies, ride-hailing companies, and courier companies.
Partnership with other brands to increase insurance claim payment trust. As people lost their jobs, it relieved customers by asking them to delay or reduce their premium payments to maintain their insurance contracts. They helped customers submit requirements digitally. The customer communication was via apps, emails, Zoom, or call centers.
Bhima Insurance Operation in Pakistan in the Covid period:
Bhima also educates about diabetes, hypertension, nutrition, and women’s and children’s health. Before the pandemic, they had 10,000 consultations; after the pandemic, 65–70,000. They have quality control, claims, and customer service. This setup has 1500 supporters. The pandemic disrupted office seating, networking, and the environment.
Bhima’s 1200 agents work in Pakistan’s most prominent office. They focused on customers and employees. Laptops, internet, and cloud infrastructure supported the systems. Incentives and transportation from the office to the vaccination center vaccinate them. Diabetes drugs were discounted with the partnership.
Insurance companies’ investments also eroded as their return on the investment decreased, and they had more claims. They did not see many of them becoming bankrupt, as insurance companies are most heavily capitalized worldwide. The current regulatory regime ensured that all the companies across the sector were adequately capitalized so that any such challenges would be met.
Role of ICT in Pakistan’s insurance sector in comparison to other developing countries:
This study chose four developing countries Kenya, India, Bangladesh, and Morocco similar to Pakistan based on the Human Development Index (Human Development Reports). They also have identical similarities in terms of ICT adoption ranking (360 Degree ICT adoption ranking), insurance penetration, FinTech adoption ranking (Global FinTech Index, 2020), youth (citypopulation.de), bank accounts percentage (en.reinger.com), the poverty rate (Pew Research Center, 2020), culture (Hofstede culture comparison insight website), digital adoption index (World Bank Re), and (Map Porn, 2022).
This study fills the gap in exploring issues preventing insurance penetration above 1 percent in Pakistan by using benchmark countries similar to Pakistan across a multidimensional scale. following challenges are encountered in all developing countries: lack of awareness, lack of IT skills, Lack of resources, weak regulatory framework, lack of infrastructure, and lack of investment. Pakistan as a developing nation uses InsurTech to sell property and health insurance to youth, poor, women, Muslims, commercial, and other consumers.
Developing countries are compared by HDI and ICT adoption. Insurance benefits education via ICT can increase insurance consumption. ICT growth is linked to African insurance penetration, according to PwC, 2015. ICT and insurance enterprise growth are poorly studied. ICT boosts insurance production, specialization, service speed, and quality.
Insurance means to protect against loss to the insured party by an insurer who takes responsibility in case of misshape. Romans and Greeks introduced health and life insurance by establishing benevolent societies to bear several funerals in 600 AD.
In 17 th century, the friendly society concept was introduced in England to compensate people in case of emergency. The insurance concept was introduced in 1948 under the Ministry of Commerce. It is regulated under the Insurance Ordinance, 2000.
Pakistan’s insurance sector was nationalized in 1972 in the era of butto. The life insurance sector operated under state life insurance and postal life insurance till 1992. There are less than 8 million people in Pakistan who are covered under life insurance as per Atlaz magazine.
There are three major products of insurance: life insurance, general insurance, and health insurance. Agriculture insurance is the backbone of the country. 10% of 8 million are active farmers who are covered under agriculture insurance. There are many problems that the farmers are encountering especially due to climate change and market fluxes. They are facilitated by bank loans and insurance schemes.
They are mostly insured against the following things: wheat, rice, maze, cotton, and sugarcane. Pakistan agricultural coalition made by 20 leading business group of insurance industry. They have partnerships with local and international partners to deliver solutions regarding crop insurance. Global reinsure SCOR of France, PAC and Insurtech firms like Pula Advisors of Switzerland and TPL Insurance are cooperating to provide insurance to small farmers. PAC has also linked with federal and provincial governments like Punjab and Sindh and donor companies like the World Bank and financial houses to facilitate farmers of Pakistan in crop insurance.
A short timeline is discussed here regarding key progression in this field:
2008: The Agriculture Credit Guarantee Scheme (ACGS) was introduced by the Government of Pakistan
for farmers to facilitate them in credit issuance for land fertility.
2010: The National Agriculture Insurance Scheme (NAIS) was introduced for farmers to facilitate in providing the crop insurance.
2012: Area Yield Index-Based Crop Insurance (AYIC) scheme was introduced for crop insurance. It is akin to the above scheme but the difference lies in the area of yield.
2016: Prime Minister’s Agriculture Emergency Program (PM-AEP) was introduced to improve
the assessment of credit and insurance for farmers.
In conclusion, there is huge potential in the agriculture insurance industry in Pakistan but some challenges also persist like issues with data collection and analysis, lack of funding, and low awareness and uptake among farmers. The government and other stakeholders in the country are continuing to work to address these challenges and betterment of the overall state of the agriculture insurance industry in Pakistan. Pakistan is big market for insurance companies especially due to some projects. Various hydropower projects are being developed in Pakistan, including Bunji (7,100 MW), Diamer Basha (4,500 MW) in Gilgit-Baltistan, Thakot (4,86 MW), and Dasu (4,320 MW) in Khyber Pakhtunkhwa.
In this regard, the target has been set that 60% of Pakistan’s energy will be clean and renewable by 2030. It is noteworthy to mention here that Pakistan’s solar and wind power potential is over 40,000 megawatts. Also, 30% of vehicles will be electric by 2030. The Sustainable Development Goals (SDG 7), which called for universal access to clean and sustainable energy was indispensable for progress on all 17 SDGs
as well as climate goals.
