I was just wondering
How come there is no Auto Insurance ? In Pakistan
In Western Society , the Auto Insurance does few positive things in Economy
a) It creates Jobs in Insurance sector , Insurance advisors , customer support , claim agents etc
b) It gives protection to people in time of serious accidents , helps replace or repair your car. Helps protect you
if you kills someone in accident and you get sued in court
c) It forces people to drive safely or their Insurance rate will go up , if it is too high then you can't drive your driver license is cancelled. Car is confiscated
d) Expensive cars like BMW etc have higher rates of insurance
e) Car insurance also covers for Theft incidents
Motor Bikes have the "MOST EXPENSIVE insurance premiums due to dangers to society and danger of lethal accidents
> Police force , can better control illegal cars by checking Insurance coverage
In return may be the Insurance sector can contribute a premium into Police Force , by means of Direct funding to police department based on number of insured cars on road. Extra funding to increase police salaries
Insurance also forces , smaller numbers of cars on road
This sector could easily create Million Jobs in Pakistan
People who are caught with no insurance get their licence revoked , cars sent to recycle
It is funny becasue car insurance help identify terrorist as well, most of time the Terrorist will not have any insurance paper
Typically if there is a criminal Warrent for a person , the info is channelled from police system to the insurance company so whenever the person is stoppped at road by police and they check his profile they will know he /she is a criminal wanted
Most police officers in Western Society ask 2 things (Ownership paper + Insurance)
Becasue of the fear of hig premium (monthly payments for insurance) if they get into acccident people all drive very carefully and it all contributes to a safe road experience
Some possible Job titles
> Insurance Broker
> Insurance Manager
> Under Writing agent
> Customer Service Representative (Call Center)
> Territory Managers
Indirect Jobs:
> Mechanical work done on car repairs done with Insurance company's approval
> Appraiser who judges the damage in accident prepares estimates
> Tow Truck
> Painters who paint the cars after accident brand new
> Auctioneers who buy write off cars and sell parts of it after purchase
> Car parts company in Pakistan sells new parts for repairs less chance of dented car running around city
>Lawyers pressing claims against insurance companies for negotiation of claim
Wellness Jobs:
> Nurse and Attendant care after accident paid by insurance company
> Physio therapy consultant
Private care in hospital:
>Paid for by insurance for legitimate accidents
> Fines for insurance violators (Revenue for Police department)
> Fines for people who have insurance but can't produce copy for officer
> Lawyers who work with claims against bodily harm (if you hit a person etc break their arm or kill somoene)
> Storage facilities where violator's cars are kept for demolishing or sale for unclaimed cars after certain days
Plus: Insurance dictates you install steering wheel blockers, GPS hidden locator etc so new gadgets are always being sold to consumer
Note: Added this line later when people pointed on some places who offer auto insurance , however may be 0.05% of people would have auto insurance as it is not mandatory like it is
all over the world. i.e if you have a car you need to have insurance. The fact even I did not knew about existence shows how little developed area this is
It is mandatory.
KARACHI:
In spite of frequent cases of vehicle theft and snatching in the country, most of the car buyers seem uninterested in getting their vehicles insured –
a mandatory condition for the owners aimed at protecting them from heavy losses in case anything untoward happens.
According to a survey conducted by
Pakwheels.com and
YouGov, an overwhelming majority of cars (78%) running on roads are not insured. Only 1,070 (22%) say their cars are insured.
Enumerating the reasons, Atif Zafar, auto sector analyst at JS Global Capital, said a major factor behind the small number of insured cars could be low penetration of insurance companies and lack of access to smaller and remote towns. In addition to these, he said, a large number of Pakistanis considering conventional insurance as un-Islamic and lack of customer knowledge were also among the top reasons.
“While the survey shows car insurance trend going in the right direction, the 22% insurance level is a little bit uncomfortable,” he said. “I think this should be around 40% to 50%.”
The country’s private insurance industry is too small with total premium-to-gross domestic product ratio standing at just 0.3%.
According to the Insurance Association of Pakistan, it has 38 member companies with a premium of Rs 66 billion until 2011. Of these, 32 are non-life insurance companies with premium of Rs43 billion and six are life insurance companies with premium of Rs 23 billion.
Among the 1,070 who have insured their vehicles according to the survey, 32% say they have either taken insurance cover from Adamjee or EFU Insurance having 17% and 15% share respectively.
Most of these chose Adamjee and EFU on the recommendation of friends and family members, who had experienced the services of these companies.
The remaining 68% say they have chosen one of the following companies – Askari General Insurance (8% share),
Takaful – Islamic insurance ( I thought it was un-islamic
) (7%), IGI (6%), New Jubilee Insurance (5%) and TPL Insurance (4%). Among these, a whopping 37% either do not remember or did not provide their insurance company’s name.
Talking to
The Express Tribune, an officer of EFU General Insurance claimed that the company enjoyed a share of over 50% in the auto insurance market.
“People are increasingly realising the importance of car insurance. Though it is difficult to give exact percentage growth in auto insurance annually, one can safely say car insurance is getting popular,” he added.
He pointed out that most of the new car buyers get insurance at the time of purchase, adding many purchasers of used imported cars were also taking insurance cover.
Insurance companies describe those who buy new vehicles from a company dealer as ‘informed customers’. To target them, the companies collaborate with car manufacturers and succeed in bringing most of the car buyers under insurance cover.
Annual premium
Insurance companies collect annual premium from car owners at the rate of 3% to 5% of the current value of the vehicle. However, contract details may vary from company to company.
For instance, if a car is worth Rs1.5 million, at a premium of 4%, the owner needs to pay Rs60,000 annually to the insurance company.
High risk
High risk of theft, snatching and damage to new vehicles in big cities has also prompted car owners to go for tracking services. To take advantage of this, many leading insurance companies offer such services along with insurance with some additional charges.
An officer of Adamjee Insurance told
The Express Tribune more people were realising the fact that a car without insurance was a big risk, especially in cities like Karachi where risk factor was one of the highest in the country.
Industry officials say one of the biggest risks to new cars in Karachi is theft, especially when a car crosses the city’s limits and enters smaller cities of Sindh and Balochistan.
However, this proves a blessing in disguise for the car insurers in big cities as more people tend to take insurance cover to protect their vehicles.
In coming months, two factors are expected to aid car insurers. One – the domestic auto industry is about to regain historical production figures of over 180,000 units per annum after a long wait of five years. Two – the import of used Japanese cars has surged as the country imported over 55,000 cars last year.
Published in The Express Tribune, September 10th, 2012.