By Qudsia Bano

In Pakistan, the insurance sector finds itself in immense competition, with experts underscoring the necessity of embracing digital transformation for survival in an increasingly competitive environment. As global trends in technology reshape industries worldwide, Pakistan's insurance companies are urged to adapt or risk falling behind in the digital age. Talking to WealthPK, Syed Asif, Senior Manager at TPL Insurance, said several factors highlighted the urgency of digitisation within Pakistan's insurance sector. "Firstly, consumer expectations are evolving rapidly, driven by increased connectivity and digitalisation across all aspects of life. Policyholders now demand convenient access to insurance services, from purchasing policies online to swift and hassle-free claims processing. Meeting these expectations requires insurers to invest in digital channels and technologies to enhance customer experiences."

"Furthermore, the emergence of InsurTech startups and digitally native competitors presents a formidable challenge to traditional insurance companies in Pakistan. These agile newcomers leverage technology to offer innovative solutions, personalised services, and streamlined processes, posing a threat to established insurers. To remain competitive, Pakistani insurance firms must embrace digital tools to improve efficiency, lower costs, and differentiate themselves in the market," Asif emphasised. The Securities and Exchange Commission of Pakistan (SECP) has emphasised the urgent need for the insurance sector to embrace digital transformation to ensure its future viability. In recent meetings with insurance companies, Commissioner of Insurance, Aamir Khan, underscored the importance of innovation, digitalisation and data accessibility for the growth and expansion of the industry.

As part of its strategic plan aimed at fostering an inclusive, innovative, and robust insurance industry by 2028, the SECP has been actively engaging with insurers to spearhead digital initiatives. "Among these initiatives are plans to launch an insurance policy finder and an auto insurance repository to streamline policy tracking and enforce mandatory motor third-party insurance. Additionally, industry representatives have highlighted regulatory obstacles hindering digital distribution, particularly concerning saving products," said an SECP official.  "Non-life insurers have stressed the necessity of data repositories, collaboration and information sharing to enhance digitisation and increase insurance penetration. These discussions reflect a collective recognition of the imperative for the insurance sector to adapt to the digital age to remain competitive and relevant in the evolving landscape of financial services," according to the official.

Acknowledging the imperative of digital transformation, many insurance companies in Pakistan have initiated efforts to modernise their operations. From adopting digital platforms for policy sales and servicing to leveraging data analytics for risk assessment and fraud detection, insurers harness technology to drive innovation and improve efficiency. However, significant challenges, including legacy systems, regulatory constraints, and talent shortages, hinder progress and require concerted efforts from industry stakeholders. Despite the obstacles, the benefits of digitalisation for Pakistan's insurance sector are profound. By embracing technology, insurers can streamline processes, expand market reach, and enhance customer satisfaction. Moreover, digitalisation enables insurers to better understand and manage risks, leading to more sustainable business practices.

Credit: INP-WealthPk