‘Our mantra is that we are not focusing on fear; rather, we focus on the joys of life – Jee Lo Har Ghar. We put insurance at the back and the value out of it in the front.’ Najma Minhas Managing Editor Global Village Space sat down with Jehanzeb Zafar, CEO Askari Life Assurance to understand how the Insurance industry was coping during the Corona pandemic which has brought everyone’s life to a standstill.
What has been the impact of Covid-19 and the lockdown on the insurance industry?
Jehanzeb Zafar: Well for sure, the human race wasn’t ready to handle anything of this sort. And even if we were prepared we wouldn’t have been able to prepare to this level. This was unforeseen. The impact of this has been huge. Market activity has completely stopped.
The sector has been hit hard – while its too early to say what overall impact has been. We can expect business will shrink and insurance companies will need to come up with new ways to reach out to their clients. Our products are generally longer-term in nature -saving products – and they need high engagement and for salespeople to have a lot of physical interaction with clients.
So, the Corona lockdown has significantly affected our business. Like many other companies we have our business continuity plan and work from home policies, but to be honest we weren’t ready to deal with a pandemic of this sort.
Secondly, a lot of our business is dependent on clients having a disposable or steady stream of income, saving for a child’s education plans or post-retirement plans have taken a hit and have come completely to a standstill.
There must have been some clients that were infected by this, or some may have lost jobs. How have you helped your clients during this period?
Jehanzeb Zafar: Our clients are our family, and our relationship is built based on trust in hard times. This relationship – especially in life insurance products – carries on for decades. Our partnership lies way beyond one quarter or one year. We have gone out of the way to help them.
A lot of clients pay their premiums annually to build their long-term savings. We understand that, in these drastic times, people might not have access to capital or might not be able to make payments. We have relaxed client payment dates and allowed them to delay payments.
We don’t want their long-term goals to be affected, so, we have given them grace periods in their annual payments, up to 2-3 months relaxation, but if needed will extend it further to ensure our clients feel secure in their investments and plan for the future.
These have been difficult times for employees as well as businesses, with many people being laid off. How have you looked after your employees during this period?
Jehanzeb Zafar: It is an extremely challenging period, many businesses have found viability an issue. What we had been expecting in terms of revenue and business growth for this year has not happened. But we need to realize that it is the same for everyone out there. Luckily, the majority of the shareholding of our company is by the Army Welfare Trust, so we have been shielded by the prevailing uncertainty other businesses are facing.
We have a lot of sales agents who are on nominal salaries and the majority of their income is based on commissions. We know life insurance has a strong and bright future, but that still depends on how the economy is reacting. As a company, we are trying to maintain as many jobs as we can.
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We are trying to see how people can be used in different ways and in different areas. We are trying to cushion the economic impact of the virus by extending salaries for two-three months, but if much more time elapses, it will put pressure on us. Secondly, due to immense uncertainty, it has caused a lot of psychological pressure on the employees as well.
There are horrific stats of how many people are losing their jobs. The first thing we have done is that we are gearing the organization to embrace change, and continue to spread the message of hope and positivity because that is what a life insurance company is supposed to do. That is something we have always tried to reflect in our outlook, as well as in our product development.
Our staff members are under immense stress and we are trying our best to ensure they are in the best of health and high spirits. We are lucky that there exists immense resolve and resilience in our younger generation. Insh’Allah once these issues pass, I am hopeful that this generation will work wonders and shape a better market in the future.
Our clients are our family, and our relationship is built based on trust in hard times. This relationship – especially in life insurance products – carries on for decades. Our partnership lies way beyond one quarter or one year
I would expect that Covid-19 should also make people aware of the importance of life insurance and looking after their families. Do you think you may see an uptick in interest in these plans in the future?
Jehanzeb Zafar: It is probably too early to see any signs of whether there will be a growth in the segment or a higher uptake of insurance products. For the past decades, despite the political and economic uncertainty, the insurance sector has coped well with challenges.
So, going forward I see a growth in penetration of insurance products, but it remains to be seen how the market reacts and how the customer behaves. As much as there is an urge to get things back to normal, look at how markets have opened in China, I think a new norm will emerge from this pandemic.
Dealing with people will be different. People are avoiding physical interaction and people are more saving conscious. I do expect to see a surge in insurance uptake. However, I think two things will be essential, first companies need to realize what clients need as a lot has changed over the past year. Secondly, insurance companies must increase awareness of products, as this is the right moment to do so. There will be some markets that decline but new opportunities will open up.
Corona has emphasized to people how vulnerable their lives are to something that is totally out of their control. What kind of opportunities do you see have emerged out of this?
Jehanzeb Zafar: People will realize the importance of having access to savings, health insurance, and medical treatment. People who haven’t had medical insurance before, and have had to deal with this virus, will realize that these products help you maintain your financial sustainability.
ICU’s and hospitalization have become a luxury and out of reach for many people. Insurance products give them an element of sustainability and sharing of risk as a community so that everyone at the time of need can get access to those services.
Does this allow you to explain to people why they should be buying other types of products in addition to health insurance?
Jehanzeb Zafar: I believe that insurance penetration as a percentage of GDP is low in Pakistan as compared to the region. As an industry for the past decade, we have been trying to look at factors that keep it low, for example, illiteracy is one part, but at the same time, there is a prevalence of the idea that everything will be alright as Allah will care of us.
That is a factor, which we do not dispute, but Allah has also told people to design their solution and plan for their future. The Prophet’s famous hadith of ‘Trust in Allah, but tie your camel first’ is not fully understood by the people.
People in Pakistan don’t plan to remove uncertainty, in general, but I think this situation has made people aware that they need to plan more and reduce their risk and this will help them to start looking at products such as life insurance, which are not very expensive in the long run.
These will work well with other products as mentioned before. How insurance companies plan to tap into this remains to be seen, more out of the box solutions will be needed. We need to develop new products.
Which field is Askari Life strongest in?
Jehanzeb Zafar: We are pushing hard to be a market leader in this segment. I personally think, one drawback, I have seen in the life insurance sector is that the majority of the products offered usually revolve around death and uncertainty; the products in the market give their benefits after some calamity has struck. We have tried to change this.
Our mantra is that we are not focusing on fear; rather, we focus on the joys of life – Jee Lo Har Ghar. We put insurance at the back and life’s value out in the front. We are engaging with multiple partners and alliances that can help our customers focus more on living aspects such accessing golf memberships and health clubs, for education services we are working with career counselling institutions, tests preparations, discounts on school fees and so on, all to make life worth living.
To deal with the current scenario, we are looking at some short-term products, because this is not a phase in which people will want to enter long-term savings or investments. We will offer health services, this is not only health insurance but also includes telemedicine services, surgeries and pandemic related viruses.
Allah has also told people to design their solution and plan for their future. The Prophet’s famous hadith of ‘Trust in Allah, but tie your camel first’ is not fully understood by the people
Last year Askari Life Assurance did tremendously well. What were the reasons? Do you see those factors continuing once we are out of the woods here?
Jehanzeb Zafar: Askari Life is a relatively new group, however, I think Askari has a strong brand name as it has been involved for a long time in the financial markets in terms of the banking and general insurance sector. Furthermore, we have an immensely talented team that the board and management have put in place.
We have been very fortunate that we have a good mix of seasoned industry specialists who have gained extensive experience in their sector and have a perfect view of how the market behaves. Plus, we have a dynamic mix of people who want to try different things and ‘change the world.’
It is a challenge to maintain a balance between both but we have been largely successful in this. Last year was a tough one for the industry as inflation hit hard, but industry is generally performing well since the penetration is low and there is a gap that needs to be covered.
How can the government facilitate the insurance industry in helping it manoeuvre the economic crisis that it is currently facing?
Jehanzeb Zafar: In my opinion, life insurance companies have contributed tremendously to the financial security and sustainability of our clients and the economy. In the past few years, banks have spearheaded selling insurance products both by creating awareness and enhancing access by the public to insurance products.
Recently, in light of Corona – the government and regulatory authorities are coming up with general schemes to ensure that there is low unemployment and that companies are supported in terms of their financial responsibilities, but, no specific focus has been given to the insurance companies or the sector as a whole.
The life insurance sector employs more than 200,000 people, who generally are on low salaries and depend upon commission earnings. They earn when the market is open and is stable. As long as the economy is closed, this force is suffering immensely as it depends upon contact with others. The government needs to look at how to support the huge manpower that the life insurance industry carries.
Furthermore, the government must plan on how to facilitate our sector in terms of our financial obligations. They have to understand that no business can absorb such a long time-lapse of not operating in the market. The Security and Exchange Commission has always been cognisant of the challenges the industry is facing and they have been supportive.
We expect that they will take due measures to support the industry enhancing its sustainability and growth. Practically, schemes have been announced for businesses to take loans at low-interest rates to support the staff and reduce unemployment but the impact remains to be seen how effective they are.