‘Covid-19, an opportunity for digital insurance companies’

KARACHI: The global and the domestic impacts of coronavirus pandemic have created an opportunity for insurers to digitise their operations, said Murtaza Khalil Hassan, the chief executive officer at BIMA Mobile Pakistan, in an interview with The News.

Q. The current pandemic has forced many insurers to review their strategy, particularly in regard to digitisation of the business. What are some of your expectations and/or hopes for the industry post-Covid-19?

A. As a result of the situation surrounding Covid-19, there is a unique opportunity for insurers to rethink and innovate as they adjust and respond.

The industry is heavily dependent on policies being issued on paper and sent out to customers physically. Covid-19 has further highlighted the need for insurers to streamline, improve and digitise operations and claim functions. Insurers are more than ever recognising the linkage between customer experience and the digital strategy, transformation approach and operational improvement. In a post Covid economy, customers now expect and prefer speed, simplicity and delivery of services in digital setting.

Perhaps the most significant changes will be in the way that insurance products are sold, serviced and the usage of customer data. These changes will lead to much greater levels of personalisation and so change the customer experience and value proposition.

I expect that the industry will move towards digital apps for its sales distribution. BIMA is also working to launch its digital app in Pakistan. BIMA is a health and insurance service provider that provides services through mobile devices. In Pakistan, BIMA was launched in 2015 and since then has reached over 5 million underserved customers. It’s able to digitally distribute insurance products to the mass consumer market in an extremely cost-effective way, thereby widening access to insurance on an unprecedented scale.

The company’s ability to automatically deduct premiums from customers’ phone credit or mobile money wallet means that the unbanked also have access to an effective payment channel.

Q. What are the challenges and opportunities for mobile delivered insurance in a developing country like Pakistan?

A. One of the main challenges is to leverage the available payment channels and add recurring payment facilities to support smaller and regular insurance premium transactions. Secondly, higher distribution costs which pose a challenge to create high value insurance products for customers.

Finally, customer education remains a key challenge. Most consumers in developing countries are experiencing insurance for the first time and many of them have a general sense of mistrust in financial services. If their first experience with insurance is not positive, for instance the company doesn’t pay claims or goes bust, this can be a huge setback in the education and is detrimental to our efforts in breaking down trust barriers.

The opportunity in my opinion is the ability to market low cost insurance products through public private partnership. This will enable us to reach far greater segment of population than is otherwise possible to give greater benefit to the people of Pakistan.

Q. When it comes to claims, how does mobile delivered insurance benefit the end consumer? Is the process as difficult as conventional insurance?

A. No, on the contrary it is a very easy process and uses technology for the customer’s convenience. For example, at BIMA, when claiming insurance, most customers just submit the picture of their discharge slip through WhatsApp in addition to the option of submitting it physically.

After the claim and thorough verification of the documents, the claim is paid in three working days through mobile money. Hence, it is hassle free and quick and the claim can be made sitting anywhere or on the go.

Q. What is your vision for the company for the next years in terms of size and impact?

A. The company aims to add further partners on board to help further expand its penetration in the market.

BIMA also aims to expand its footprint through DTC (direct to customer) channels. We will also be relying on support from our digital app to spurn further growth.

Pakistan’s insurance market was worth Rs297 billion as of 2020. Out of this, 65 percent is life insurance and 34 percent is non-life insurance. There are eight players in the life insurance sector with State Life and Jubilee Life leading the market. Similarly, in the non-life segment, EFU and Adamjee are amongst the top players. There are around 30 institutes in general insurance in the country.

Even with all these players in the market, there is a huge potential for further growth. At present the market penetration percentage hovers around a mere 0.9 percent of Pakistan’s GDP, which is a much lower number compared to other emerging market’s average of 3.2 percent.