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Serena Hotel, Islamabad, Pakistan August 30-31, 2016

REPORT

Multi-Stakeholder Dialogue on Microinsurance  

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Table of Contents

List of Acronyms .......................................................................................................................................... 3

Background on Microinsurance (MI) and MEFIN ....................................................................................... 4

Background on the Two-day Multi-Stakeholder Dialogue (MSD) .............................................................. 4

The MSD’s Objectives .............................................................................................................................. 5 MSD Proceedings: ........................................................................................................................................ 5

Welcome Remarks by Mr. Fida Hussain Samoo, Commissioner Insurance, SECP ................................. 5 Inspirational Message by Dr. Antonis Malagardis, Program Director, RFPI II Asia, GIZ ...................... 5

Presentation on Background, Rationale and Objectives of the MSD by Dr. Antonis Malagardis, Program Director, RFPI II Asia, GIZ ....................................................................................................... 6

Presentation on the SECP, Insurance Division: Mission, Vision and Focus on MI by Sayyed Nayyar Hussain, Director, Insurance Division, SECP ........................................................................................... 6 Presentation on Regulatory Impact Assessment by Mr. Tariq Bakhtawar, Director, Insurance Division, SECP ......................................................................................................................................... 7 Highlights of the GIZ Study on the Strategic Framework for MI Development, by Dr. Antonis Malagardis ................................................................................................................................................. 7

Key Discussion Points by the Panellists of the Two Public-Private Dialogues (PPDs) ............................... 8

PPD on Regulatory Framework for MI and Feasible Business Models ................................................... 8 PPD on Suitable Products and MI Operations and Distribution ............................................................. 10

Roles and Responsibilities of the key stakeholders .................................................................................... 12

Regulator ................................................................................................................................................. 12

Insurance Companies .............................................................................................................................. 12 Distributers/Brokers ................................................................................................................................ 12

Key Suggestions .......................................................................................................................................... 12

Business Models ......................................................................................................................................... 14

Group Presentations ................................................................................................................................ 15 Presentation by Group 1 ...................................................................................................................... 15

Presentation by Group 2 ...................................................................................................................... 16

Presentation by Group 3 ...................................................................................................................... 16

Annex-I: Participants of the Three Groups ................................................................................................. 18

Annex II: Program of Activities .................................................................................................................. 20

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List of Acronyms ADB Asian Development Bank EFU Life Eastern Federal Union Life Insurance GDP Gross Domestic Product GIZ German Development Cooperation

German: Deutsche Gesellschaft für Internationale Zusammenarbeit IAIS International Association of Insurance Supervisors IGI International General Insurance IT Information Technology MEFIN Mutual Exchange Forum on Inclusive Insurance MFIs Micro-Finance Institutions MI Microinsurance MSD Multi-stakeholder Dialogue NADRA National Database and Registration Authority NFL Non-Formal Language PMN Pakistan Microfinance Network PMNHIP Pakistan Prime Minister National Health Insurance Program PPD Public-Private Dialogue PTA Pakistan Telecommunication Authority RFPI Asia II Regulatory Framework Promotion of Pro-Poor Insurance Markets in Asia II RIA Regulatory Impact Assessment RSC Regional Steering Committee SBP State Bank of Pakistan SECP Securities and Exchange Commission of Pakistan SMS Short Messaging Service TWGs Technical Working Groups

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Background on Microinsurance (MI) and MEFIN The Pakistan economy expanded by 4.24% in the fiscal year 2014-15. Growth came from all sectors including agriculture, industry and services. A large portion or 43.5% of its workforce relies on agriculture which also contributes 20.9% of GDP. One of the major tax sources is its industrial sector which produces 20.30% of the national GDP. 65.4% of Pakistan’s industrial sector comes from manufacturing that saw growth by 3.62% in 2014-2015. One of the highest increases came from small scale manufacturing at 8.24% for the same year.

Most low-income people in Pakistan, those working in the agriculture sector, as well as in textile and clothing are exposed to a number of life risk events. These are illnesses, accidents, disability, deaths, natural disasters which result to income insecurity. Affected low income people are at risk of significant decline in quality of life due to lack of social safety nets from Government, and insurance provided by employers, owing to the informal nature of their livelihoods. These financial stressors result in depleted savings, reduced household or income generating assets and increasing informal loans often with high interest.

Microinsurance (MI) can provide social and financial protection against contingencies. Specific MI products can manage the negative impact of unexpected incidents for low-income people. It can also compliment Government programs ex post of catastrophic events. Within Asia, development in MI regulation and implementation is picking-up. Insurance Regulators of Indonesia, Nepal, Mongolia, Philippines, Thailand and Vietnam signed the so called Cebu Declaration on May 16, 2013 to commit the promotion and development of inclusive insurance (MI) markets, with the officers from GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) and the Asian Development Bank. The MEFIN Network convenes Public-Private Dialogues (PPDs) as one of its strategies in promoting and developing inclusive insurance in the region. The first MEFIN PPD was held on July 12, 2016 in Manila, the Philippines within the same regular organizational meetings of the Network’s Technical Working Groups (TWGs) and Regional Steering Committee (RSC). The Securities and Exchange Commission of Pakistan is a founding member of MEFIN and is working closely with GIZ RFPI Asia II to advance MI in the country.

Background on the Two-day Multi-Stakeholder Dialogue (MSD)

The MSD with related public and private stakeholders was linked with the MI Strategy Study/Paper commissioned by the GIZ Regulatory Framework Promotion of Pro-Poor Insurance Markets in Asia on the formulation of the Strategic Framework for MI Development in Pakistan (2016-2018). The study was consulted with various public and private sector stakeholders. The dialogue participants included State Bank of Pakistan, the Ministry of Commerce, Pakistan Telecommunications Authority, National Disaster Management Authority, Pakistan Microfinance Network, Pakistan Microfinance Investment Company, microfinance institutions, Telecommunications company, and Insurance Association of Pakistan which shared their thoughts on the regulatory framework and business models, reported the Associated Press of Pakistan

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The MSD’s Objectives • To consult the results of the GIZ Study on the Strategic Framework for MI Development

in Pakistan with all actors in inclusive insurance and form a consensus on broader issues related to overall strategy, activities, responsible stakeholders and timelines;

• To set clear objectives leading to an agreed strategy and milestones within timelines; • To agree on specific responsibilities of the key stakeholders based on the GIZ Assessment

and action plan; & • To revisit possible business concepts on MI based on the agreed GIZ Assessment for

further expansion and consideration of consumer protection through appropriate regulations

MSD Proceedings: Welcome Remarks by Mr. Fida Hussain Samoo, Commissioner Insurance, SECP

Commissioner Samoo welcomed all the participants of the MSD and showed his openness for devising a joint strategy for the development of MI in Pakistan. He mentioned the Code of Corporate Governance 2016, Bancassurance Regulation 2015, Micro-insurance Rules 2014, Takaful Rules 2012, Small Dispute Resolution Committee as few of the major reforms for strengthening the regulatory industry. Mr. Samoo reaffirmed SECP’s commitment to the National Financial Inclusion Strategy. The SECP focuses on low income people because

they face a number of risks events like illness, accidents, disability, early deaths, natural disasters. He was believed that the multi-stakeholder’s dialogue would create synergies to address the financial protection of the vulnerable groups.

Inspirational Message by Dr. Antonis Malagardis, Program Director, RFPI II Asia, GIZ

Inclusive insurance in development in South America, Africa and Asia highlight the need for a clear definition of MI in terms of target market, implementation of the insurance core principles, right emphasis on the accessibility and affordability. Value proposition is mainly a result of reliable protection from risks, simple processes, easy access to services from a trusted brand and policy management convenience. Dr. Malagardis related that among the 380 million policy holders of MI worldwide, almost half are located in Asia for credit life, personal accident and property insurance.

Enrolment in health and agriculture MI are increasing thus, need particular attention by the regulators and the key market players, with their complex nature. In Pakistan, the industry has experienced much development with regulated players in the course of 15 years, while microinsurance business players are developing farther. This requires regulatory interventions over time particularly to clarify the definition of MI for clients and players, as well as to clarify consumer protection processes.

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Presentation on Background, Rationale and Objectives of the MSD by Dr. Antonis Malagardis, Program Director, RFPI II Asia, GIZ GIZ, a federal-owned German enterprise implements the RFPI program on inclusive insurance in six countries of Asia since 2013. Pakistan joined the network in January 2016 to benefit from the global learning on MI through the MEFIN Network which partners with local partners including the insurance industry, to promote MI. Public and private sector representatives of the member countries can become members of the MEFIN and contribute with their experience in MI, to shape the innovative and sustainable business models that provide value to clients.

The main objectives of the MSD are to validate the key results of the strategic framework in Pakistan, agree on specific responsibilities of the key stakeholders and revisit possible business concepts on MI and finally formulate business models “to develop a model product as part of business cycle process.”

Presentation on the SECP, Insurance Division: Mission, Vision and Focus on MI by Sayyed Nayyar Hussain, Director, Insurance Division, SECP

Mr. Hussain explained the SECP’s vision, mission and focus on MI. The Government has launched the National Financial Inclusion Strategy (NFIS) in 2014 and has taken initiatives to provide social micro health insurance through the Pakistan Prime Minister National Health Insurance Program (PMNHIP). He shared that the SECP MI Rules were promulgated in 2014 and the SECP is revising the regulatory framework while recognizing the concept of “Proportionality”. SECP is promoting balance between its regulatory objectives of “Consumer Protection” and

“Market Development”, while designing a tailored regulatory framework, determining financial & regulatory reporting & the resulting supervision and MI product registration process.

Mr. Hussain’s presentation highlighted the challenges faced by the regulator while recognizing the Proportionality, as well as those encountered by the insurance companies while underwriting MI. These included the lack of pricing data for the informal sector, the need for imparting adequate training to intermediaries and the lack of innovative underwriting techniques for the informal sector.

The insurers are facing difficulties while striking a balance between simplification & prudence in terms of risk of anti-selection with voluntary products. They are designing policy documents with minimal exclusions, which results in increased cost, simplifying underwriting results which increases complexities during claim adjudication, and designing simplified and innovative claims settlement processes.

Mr. Hussain suggested tailoring the regulatory framework to promote MI. He proposed to lower capital requirements, bundle life & non-life insurance products simplify and make product approval process more efficient to make MI more saleable. He suggested that the high acquisition costs in MI can be contained through use of technology-based distribution channels; wherein SECP may issue the regulatory directions in respect of operation of such channels. Mr. Hussain persuaded insurers to develop simplified insurance products, tailored to the needs of low income persons, with simplified terms, processes and procedures. The

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need of innovative claims settlement process and underwriting procedures was also highlighted to facilitate the less informed persons in the low income segment.

Presentation on Regulatory Impact Assessment by Mr. Tariq Bakhtawar, Director, Insurance Division, SECP

Mr. Bakhtawar introduced the Regulatory Impact Assessment (RIA) which was done by the Philippines last year and implemented by Pakistan this year. The ten RIA indicators included demonstrating the volume, quality, consumer protection related needs, and awareness of the MI products. Data collected by the SECP within three months allowed an insight on the number of policy holders based on a premium Rs.5,000/annum or less.

The assessment of Pakistan’s insurance market presented the factors that have caused low penetration of MI in the country. These included: low insurance education and awareness, the absence of a successful business model for product and service delivery; and unavailability of reinsurers to cover the portfolios.

The recommendations for regulatory modifications focused on intensifying financial education, focus on consumer protection, and diversification of product development and tapping innovative distribution channels.

Highlights of the GIZ Study on the Strategic Framework for MI Development, by Dr. Antonis Malagardis Dr. Malagardis underscored Pakistan’s economic growth trends, the impact of catastrophes on the insurance industry, the profile of the insurance providers, the MI market, and the role of the right policy framework to underpin the growth of the industry. He emphasized the need to understand to the various contexts in the design of useful products that responds to the needs of the potential clients. Dr. Malagardis shared that the development of the MI policy framework provided a positive impact on the growth of the MI industry. However, he also highlighted that 68% of Pakistan’s insurance market is untapped.

According to a GIZ assessment of MI in Pakistan, a limited range of products were available in the market while the industry had not defined a sustainable business model for MI. The proposed growth drivers focused on revisiting the MI Legal Framework, support for viable and innovative business models, consumer awareness, research to understand the MI market, use of technology, increasing the number of reinsurers, capacity building of all stakeholders, development of performance benchmarks, and coordination amongst stakeholders. The presentation also highlighted milestones and the role of different stakeholders for overcoming the challenges and developing growth drivers.

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The MSD participants were introduced to the Mutual Exchange Forum on Inclusive Insurance (MEFIN), formed on May 16, 2013 and transformed into a Network since January 2016 and comprised of Indonesia, Nepal, Mongolia, Philippines, Vietnam and Pakistan. The MEFIN network is committed to promote and develop MI markets. It was shared that any stakeholder, willing to learn from the regional experience, share their knowledge on the industry and give time to the forum, could join the forum by writing to its secretariat.

Key Discussion Points by the Panelists of the Two Public-Private Dialogues (PPDs) PPD on Regulatory Framework for MI and Feasible Business Models

Panelists: Mr. Syed Nayyar Hussain, Director, SECP Mr. Muhammad Faisal Mumtaz, Divisional Head (Actuarial), State Life Mr. Mohammed Ali Ahmed, Chief Strategy Officer & Executive Director, EFU Life Mr. Murtaza Khalil Hassan, Head of Head of Insurance &

Savings, Telenor Moderator: Ms. Sabahat ul Ain, Assistant Director, SECP Panel Discussion: There was a debate on the definition of MI, with two opinions: Mr. Muhammad Ali Ahmed was of the opinion that it should be called as ‘Mass Insurance’ to broaden its scope and to cover more people regardless of their income of social status; or as ‘Inclusive Insurance’, wherein MI can be a part of it. The MI can be linked to a certain amount of premium and total sum assured. The experts favouring mass insurance shared that people earning from the informal economic sector do not have any formal evidence of income, thus, definition can be for an insurance policy worth Rs.5000 or less, as mass insurance. From the audience Mr. Rehan Butt (Micro Ensure) shared that globally big insurance companies, such as Allianz, have stopped calling it MI rather insurance companies take it as “insuring the uninsured’ or as “emerging customers”. From the audience, Mr. Sohail Fakhar, Group Head (Corporate Business, Marketing & Administration), Jubilee Life shared his counter argument in favour of using the term MI to focus on the specific needs of low income groups or poor people. Emphasis was on the design of customized insurance products for low income groups as a separate niche, otherwise their specific needs can get diluted into mass insurance. Mr. Syed Nayyar Hussain (SECP) asked whether the low level of loss ratio was possibly linked with low awareness level amongst policy holders. The panelists and participants agreed that multiple factors contribute to low loss ratio, which does not necessarily indicate low awareness.

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There was a discussion on capping the acquisition cost by regulatory authorities to reduce the loss ratio. Mr. Muhammad Ali Ahmed (EFU Life) countered the argument with the infancy of MI in Pakistan, which could negatively impact on the industry. Mr. Syed Nayyar Hussain (SECP) shared that proportionality is one of the core principles of the International Association of Insurance Supervisors (IAIS) that the SECP takes as a guide. Proportionality requires a level of regulation in accordance with the inherent risks of MI in the industry. SECP is proposing for low paid-up capital requirement for companies who engage in MI, in the new Insurance Ordinance, compared to conventional insurance. It proposes for low statutory deposits and tailor-fitted requirement of reinsurance based on the needs of the MI market. It also allows for combined license for life and non-life insurance products. The panelists appreciated the concept of ‘proportionality’, with the suggestion to reflect it in the new insurance ordinance. The SECP representative also appreciated the idea of promoting MI or mass market insurance. He suggested focusing on the number of lives that an insurance company could cover under the umbrella of MI, aside from the premium that will be earned. Loss ratio and acquisition cost are important to be considered but the top 4-5 insurance companies of Pakistan (the names of companies were not mentioned by him) have enough financial resources to experiment on developing and promoting innovative and sustainable MI products. The group proposed to provide the industry leeway to experiment and develop new MI products for a period of 2 to 3 years. Based on the learnings of the industry, the regulator could devise a practical regulatory framework that can be implemented by the industry. Stringent regulatory framework during the infancy stage of MI in Pakistan would not serve the purpose of market expansion and consumer rights protection. Moreover, incentives shall be provided to policy holders to promote a paperless transaction, e.g. clients who do not ask for paper documents may be charged less and vice versa. Mr. Muhammad Ali Ahmed (EFU Life) emphasized the simplification of the MI processes and customer disclosures to strike a balance on marketability of the product, since stringent disclosure sometimes do not serve their purposes. He also suggested that payment collection methods should be simplified in collaboration with SECP, State Bank of Pakistan, branchless banking operations and insurance companies. He proposed to have a nationwide easy to access payment collection method supported by a cost effective mass scale set up. He recommended that the key stakeholders including the State Bank of Pakistan (SPB) need to look into it as the SECP alone cannot do this. There was a consensus that the saving component should also be included in the revised MI rules. The kind of products to be offered under the savings plan was debatable and the key stakeholders should be consulted on it, added Mr. Muhammad Ali Ahmed. SECP shared that according to research by the World Bank in 2012, the potential market of MI in Pakistan for life insurance is nearly 31 million, compared to the current policy holders of MI numbering at approx. 10 million. In the case of health insurance the potential market is approx. 80 million. Mr. Muhammad Faisal (State Life Insurance Corporation of Pakistan) shared low enrolment rates for MI among the masses, as expected. Low income people were willing to be covered by MI but wanted to get it for free. Awareness on MI and health insurance infrastructure needs to be enhanced to promote Micro-health insurance.

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Mr. Murtaza Khalil Hassan (Telenor) highlighted that an MI product seen as a value addition by a client is more likely to be bought. He suggested marketing an MI product in a simple and easy way to explain its features and value. He also mentioned that in addition to health and life insurance, general insurance for home, property, crops etc. has to be tapped by MI. Mr. Muhammad Ali Ahmed (EFU Life) relayed that technology is needed to be well explained to the client to gain trust and provide security when purchasing in the absence of lengthy paper work. The SECP and trusted distributors can play an important role to enhance clients’ trust on technology by publicly supporting this modality. Insurance companies also need to train their workforce on the use of technology to manage any problems on use. From the audience, Mr. Rehan Butt (Micro Ensure) suggested reducing reliance on the insurance contract and gave equal focus on explaining the product well to promote understanding of the MI policy coverage.

For those clients buying an insurance policy through the use of technology, Mr. Nasar us Samad, CEO, Alfalah Insurance, emphasized the need to explain the features of the product, to inform beneficiaries of the policy and encourage clients to give the identity and contact details of their beneficiaries, especially in the case of life and health insurance. Biometric verification system of NADRA can also be used to enhance the trust of clients in a paperless environment, according to Mr. Muhammad Ali Ahmed (EFU Life). Mr. Tariq Sultan of Pakistan Telecommunication Authority (PTA) proposed to create a mechanism to get in touch with a client even if she/he changes her/his cell number due to any reason. He also proposed avoiding small size fonts of policy documents in order to avoid any ambiguity regarding insurance policies.

PPD on Suitable Products and MI Operations and Distribution

Panelists:

Mr. Sohail Fakhar, Group Head (Corporate Business, Marketing & Administration), Jubilee Life Mr. Rehan Butt, Head of Business Development-Asia & Country Manager Pakistan, Microensure Mr. Osman Haneef, Managing Director & CEO, MILVIK Pakistan, MILVIK

Mr. Nadeem Malik CEO, IGI Life

Moderator: Dr. Antonis Malagardis, Program Director, RFPI II Asia, GIZ Panel Discussion:

The level and depth of debate and discussion in the MSD impressed the participants/panelists as they heard the view point of various stakeholders with regard to MI. The chance to

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understand the challenges with regard to MI products, pricing, distribution and the role of SECP was valued. The availability of many experts under one roof to discuss the way forward to promote MI was also impressive for the participants. The discussion on the extent of regulation by the SECP was also quite informative and it was encouraging to know that the SECP is quite focused on promoting the MI industry by proving the key stakeholders with an enabling environment. It was suggested to organize such forums more often. There was a consensus amongst panelists on speeding up the implementation process to promote MI in Pakistan. The term MI was not included in the Insurance Ordinance 2000 as it was not yet a separate product segment internationally. The MI is inclusive insurance product for low income groups. The group agreed that a reliable distribution is crucial to make a breakthrough in raising the outreach of MI. A trusted distribution channel with the help of technology can replace the conventional complex paper documentation process. Role of Insurance Company: Mr. Nadeem Malik (IGI Life) shared that insurance companies face the challenge of setting the right price point for their products as historic and secondary or reliable data regarding clients is unavailable. Operational efficiencies and intermediaries/distributers need to be managed well in a way that the MI product does not become unaffordable for clients. Mr. Sohail Fakhar (Jubilee Life Insurance Company) shared that Jubilee Life Insurance company started micro-health products in 2007, and considers their experience on MI products as learning that enable the improvement of MI products. IGI is committed to MI and is ready to listen to and experiment on new ideas by other key stakeholders. Mr. Rehan Butt (Microensure) shared his company’s experience of investing funds to learn what suits general and MI clients. Microensure has studied the market, the poor peoples’ way of thinking/decision which were used to design the MI products, as well as the technology that can help to promote a paperless environment. Mr. Butt related their experience of responding to customer calls more effectively during pre and post launching of a product. Microensure has experience of working in different markets. Mr. Jibran Paracha (SECP) shared that SECP’s role is to identify the areas in the Insurance legislation and policy that need to be improved. SECP also wants to work on the concept of proportionality to develop the market. SECP focuses on consumers’ rights and protection, as these clients of MI are more vulnerable. SECP expressed its openness to review and register new products as MI products and commitment to streamline different MI products. Mr. Nadeem Malik (IGI Life) based on IGI Life Insurance’s experience shared that the MFIs have been the most successful distribution channel to sell MI products as they were one of the oldest players in this sector. Mr. Osman Haneef shared that Milvik Pakistan offers end to end solutions for micro insurance. By partnering with Alfalah Insurance and Warid Tel, they provided technical support and ensure quality services.

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Roles and Responsibilities of the key stakeholders

The MSD participants agreed on the following roles to be played by the key stakeholders to promote and develop MI market in Pakistan.

Regulator

• Review and tailor the MI rules to market and industry needs • Regulate specialized MI companies • Implement the national strategy for MI • Develop incentive schemes for promoting MI • Secure funding to carry out researches analysis on MI • Give the industry a free hand to some extent to experiment, learn and grow • Take steps that contribute to consumers’ trust on paperless environment • Speed up process of MI laws and policies implementation • Pursue the reinsurance of MI products in order to cover the risks • Carry out training needs assessment and capacity building of the industry

Insurance Companies

• Train their workforce to market and sell MI products, and to settle MI claims • Research, data collection and analysis on MI • Experiment on developing sustaining business models • Develop diversified MI products • Set right price for MI products • Learn from international best practices and MEFIN

Distributers/Brokers

• Use technology to promote MI • Devise innovative and easy to understand marketing plans • Answer consumers’ queries in a satisfactory manner • Learn from international best practices and MEFIN

Key Suggestions  

Growth Drivers Milestones Policy Framework for Microfinance Define microinsurance Lower paid up capital requirements for

companies engaged in MI Bundle of life & non-life insurance products Simplify product approval process Do not over regulate the industry rather help it

experiment, learn and grow Fit reinsurance regulation to the needs of

companies working on microinsurance Proposal for lower paid-up capital, statutory

deposits for companies engaging in microinsurance

Allowance of combined license for life and non-life products for MI products

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Include saving component in the revise MI rules

Encouraging Sustainable Models Simplify payment collection methods Development of appropriate and diverse products

Research and experiment to develop sustainable business models

Develop innovative and swift claim settlement processes

Keep in mind the impact of catastrophes on the MI market

Design and market MI products in a way that consumers perceive them as a value addition

Improve underwriting techniques Give incentive to policy holders to promote

paperless environment Focus on consumer protection and awareness raising

Educate and raise awareness of consumers/potential consumers on MI

Strike a balance between marketability of a product and customer disclosure

Avoid printing MI terms and conditions in small fonts

The SECP needs to work on a master plan in collaboration with the key stakeholders of the industry for raising awareness on MI

Innovation and experimentation Explain technology to consumers to win their trust on paperless environment

Do not over regulate the industry rather help it experiment, learn and grow

Use of technology and ADCs Use technology based distribution channels Collaborate with NADRA for using their

database and biometric verification system Availability of vibrant reinsurers Fit reinsurance regulation to the needs of

companies working on microinsurance Capacity Building of sector stakeholders Organize forums like MSD more often Learn from international best practices and

MEFIN Development and dissemination of sector level data and performance benchmarks

Coordination amongst stakeholders to ensure roles remain complementary and provide a common strategic direction to the sector

Interact and learn from MEFIN

* The Lead Responsibilities will be assigned to SECP, IAP, PMN & PPAF after deliberation and consultation with the stakeholders.

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Business Models

The participants were divided into three groups to discuss and work on sustainable business models. Each group was comprised of all the key stakeholders from public, private and non-governmental sector. Each group answered four questions and presented their business model:

1. Describe product features to be considered for the formulation of a model micro-insurance scheme and specify the key regulatory requirements

2. Specify three key elements to be considered for pricing purposes

3. Prioritize the steps towards a better understanding of micro-insurance demand and the role of key stakeholders

4. Comment on the three major requirements to promote the use of technology for MI

purposes.

Following was the strategy adopted by the groups for their group work

Open Floor Debate Ideas

Consensus Drill down

Participants working in three groups to develop their business models

Participants working in three groups to develop their business models

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Group Presentations Presentation by Group 1: Distribution of MI products with the use of Technology Answer to question number 1: Target population

• Target population= people earning less than 400,000/year

• Feature should be simple enough- easily communicated

• Simple enrolment process • Short term coverage • Monthly premium payment

(frequency) • No exclusion • Relaxed regulatory

environment Answer to question number 2: Need Analysis

• Target population • Distribution channels • Adequacy of derived pricing

Answer to question number 3: Product Development

• Identify and engage with clients • Engage with channels • Study end – customer risk requirement • Align with distributors objective • Determine demand

Answer to question number 4: Launch

• Access/connectivity • Affordability • Tech literacy of the client comfort and trust towards technological channels

Business Model by Group 1

Target population

Need Assessment

Product Development

Product Launch

Group No. 1 working on their business model

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Group No. 3 working on their business model

Presentation by Group 2: Distribution of MI products through a Telecoms Company Answer to question number 1:

• Need based product (health) • Hospitalization (generate) • Cashless facility • Panel based

Answer to question number 3: • Population (target market) • Insurance company • Distribution through a

telecoms company • Service provider • Regulator

Answer to question number 4:

• Mobile application for services • SMS • NADRA

Presentation by Group 3: Distribution of MI products through a Telecoms Company Answer to question number 1: The focal point of this group’s discussion was the concept of “proportionality”

Answer to question number 1 (Simplicity)

Group No. 2 working on their business model

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Life

• Natural death • Acc. death • Disability • Health

Non-Life

• Crop • Life stock • Home • Shop • Natural

catastrophe § Flood § Drought

• Assets § Package

• Savings § Bundled § Voluntary

• Credit life • Tax Incentives

§ Companies § Individuals

Answer to question number 2 (Pricing)

• Cost of insurance risk – adequately covered • Affordability

§ Break into smaller parts ♦ Levels ♦ Tiers

• Intermediary cost § M-Wallet

• Premium collection through a telecoms company • OPEX • Verification

Answer to question number 3:

• Understanding • Role of stakeholders • Local language • Collective platform

§ Funds/resources • NFL – Insurance Messages

§ TV § Radio § SMS § Street theme § Pictorial § Community meetings

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Answer to question number 4: Technology

• Pre-installed mobile apps by a partner mobile phone company for: § Savings § Insurance

• Mobile technology literacy • Marketing • Awareness • Regional languages • Pakistan Telecommunication Authority (PTA) • Telco’s • Complaints Resolution by IT platform • NADRA–Biometric

Annex-I: Participants of the Three Groups Group 1

Sr. # Name Organization 1 Rehan Butt MicroEnsure 2 Ali Haider TPC Direct Insurance 3 Dr. Aluja Zia Adamjee Insurance 4 Sabahat ul Ain Securities and Exchange Commission of Pakistan (SECP) 5 Saba Abbas Pakistan Microinsurance Network 6 Saqib Siddiqui Pakistan Poverty Alleviation Fund 7 Raheela Saad National Disaster Management Authority 8 Muhammad Jamaluddin United Insurance 9 Shan Rabbani Jubilee Insurance

Group 2

Sr. # Name Organization 1 Muhammad Nasir Ali Pak-Qatar Family Takaful 2 Naved Shahid Hannover Re-Takaful 3 Jibran Paracha Securities and Exchange Commission of Pakistan (SECP) 4 Murtaza Khalid Hassan Telenor 5 Jawad Rehmani National Rural Support Program 6 Bilal Mustafa Securities and Exchange Commission of Pakistan (SECP) 7 Khalid Qureshi IGI Insurance Ltd. 8 Muhammad Sohail Fakhar Jubilee Life Insurance 9 Awais Ahmed IGI Insurance Ltd.

Group 3

Sr. # Name Organization 1 Mansoor Ahmed Tameer Bank 2 Ahmed Kamal National Disaster Management Authority

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3 Rehan Ghani Zaraee Taraqiati Bank (Agriculture Development Bank) 4 Muhammad Imaduddin State Bank of Pakistan 5 Parvez Hamid Damen Support Program 6 Ali Basharat Pakistan Microinsurance Network 7 Khurram Paul IGI Insurance 8 Muhammad Ali Ahmed EFU Life

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Annex II: Program of Activities

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