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World: Pakistan. Choosing insurance

Elizabeth Diffin

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Advisors in Pakistan see potential for growth despite political and economic struggles.

IN PAKISTAN, it’s frequently said that insurance agents end up in the profession by chance; they don’t make a conscious choice to join the field. But MDRT members in that country are focused on making their occupation a desirable one, especially because they know that it has great potential for growth.

Currently, the life insurance industry in Pakistan contributes only about 0.3% to the GDP of the country, the lowest among its neighbors in South Asia. But Irfan Madhani, MBA, a six-year MDRT member from Karachi, believes Pakistan is on “the verge of evolution” when it comes to the insurance sector.

“There is a lot of opportunity for integration and growth,” he said. “There are still a lot of markets and demographics that are untouched.”

Tauqir Hussain Abdulla, a 15-year MDRT member from Karachi, also sees the untapped potential in his country. Less than 10% of its 220 million people are insured, and more than 30% of the population falls between the ages of 10 and 24, representing great opportunity in the coming years.

Abdulla did not plan to enter the profession. Family connections led him to join the industry, where he first focused on general and corporate health insurance. After about five years, when a client was interested in obtaining life insurance, Abdulla began the training process. Now, 21 years after he first joined his uncle’s agency, Abdulla works with high-net-worth clients, focusing on income protection and wealth accumulation.

On the other hand, Madhani, who also entered the industry “by chance,” works with a wide variety of clients, including wealthy business owners and lower- middle-class families who make just 240,000 Pakistani rupees ($1,550) annually.

“I feel confident speaking to this class because they have a lot of concerns for their families,” he said. “We tell them that life insurance policies are just like the spare tire or airbags — they only activate and come into use at a major mishap.”

He also observes a cultural reluctance, regardless of socioeconomic status, to discuss the underlying causes for insurance.

“In my country, people love to talk about returns on investment, but they are very hesitant to talk about the three D’s: death, disease and disability,” he said. “My race is not with my competitors, my race is with the three D’s, to reach my prospects before them.”

He recalls a client who was the country head of a prestigious company and enjoyed a luxurious lifestyle. The man, who was healthy and fit, died suddenly, leaving his wife in dire need of money to pay some bills immediately.

“The upper-class demographic often rejects life insurance by saying, ‘We don’t need it,’” he said. “But here I was with an example that any demographic gets hurt when their financial pillar disappears.”

We have a market which never before gave importance to life insurance policies but is now more concerned with the security they provide, due to the economic and political changes that badly affected business.
— Tauqir Hussain Abdulla

Abdulla’s greatest challenge is making clients understand exactly why they need insurance.

“Keeping it simple is always the best way forward,” he said. “Tell the client the truth. It makes it much easier for you and your client.”

This can be difficult to do because the financial services profession in Pakistan has long been hindered by negative perceptions about insurance and the people who sell it. So increasing public awareness as to the benefits of insurance is essential. Madhani says one-on-one interactions have been supplemented by marketing campaigns initiated by the government. But the economic and political climates of Pakistan also have led citizens to realize the need for such protection.

“We have a market which never before gave importance to life insurance policies but is now more concerned with the security they provide, due to the economic and political changes that badly affected business,” he said.

Shumaila Rani, a 12-year MDRT member from Karachi, agrees.

“The insurance business is growing rapidly, and as awareness increases, the business will be easier,” she said.

Rani believes Pakistan’s economic difficulties have ultimately been a positive for her business, as she can use concerns about economic volatility to convince clients to think in the long-term.

Similarly, Madhani said the high inflation rate and poor investment returns have caused his clients to worry, so he encourages them to have good risk coverage rather than focusing solely on future returns.

Abdulla also has noticed that clients now have a more sophisticated understanding of the insurance industry, which can be both a benefit and a challenge.

“The client is getting smarter and knows more due to easy access to information,” he said. “They ask better and more important questions now and do their homework before talking to an insurance agent.”

The insurance industry also has increasingly enacted regulations targeted at clients’ protection. It is overseen by a federal ombudsman, who focuses on investigating and rectifying consumer complaints against the insurance sector. As a result, the industry has become more client-centric.

And while some advisors like Abdulla and Madhani may have unintentionally ended up in the industry, it is those same clients who have led them to stay in it for the long haul.

“It is a fantastic thing that we do,” Abdulla said. “We get to meet people from all walks of life and help them plan their future. The more you put in, the more reward you get.”


Tauqir Hussain Abdulla

Irfan Madhani

Shumaila Rani


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