Complaints from insurance policyholders rise 200%
KARACHI: Although insurance penetration remains negligible in Pakistan, the number of complaints lodged by policyholders against insurance companies has grown exponentially over the last couple of years.
“The percentage of cases lodged during 2015 was 120 per cent in comparison to the preceding year. In 2016, the complaints received till May show a 200 per cent increase over the corresponding period of 2015 and 350 per cent increase over 2014,” said the Federal Insurance Ombudsman in its annual report for 2015-16.
The ombudsman received 839 complaints against majority of the companies operating in the country in 2015-16. Surprisingly, 70 per cent of those were lodged against life insurance firms.
The second and third highest number of complaints was against general insurance and auto insurance companies, respectively.
The complaints included an insurance firm making only eight monthly claim payments against the committed 12 after a policyholder (a PIA pilot) was temporarily disabled in 2011.
In another case, insurance firms changed the address of an insured factory in policy documents after it caught fire to avoid making payments and eventually did not make payments against the property damaged, the report added. With increase in the number of complaints, the ombudsman also stepped up the judgment-giving process.
“The number of cases disposed of was 200 per cent higher (in 2015) in comparison to the previous year. In 2016, the complaints disposed of till May registered a 150 per cent increase over the corresponding period of last year,” the report said.
The ombudsman received a cumulative claim amount of Rs1.89 billion against all complaints, ie 839. Of this, the ombudsman gave monetary relief worth Rs410.78 million to the parties.
Majority of the policyholders lodged complaints from Karachi.
Lahore and Islamabad were the two other big cities from where the policyholders filed complaints.
Pakistan has more than 50 insurance companies including Takaful (Islamic insurance) firms dealing with life and general insurance business in the private sector.
The ombudsman received almost two-thirds of complaints against 39 companies and the remaining one-third against other companies.
According to the report, the insurance penetration and density in Pakistan is still at “the lowest level compared to similar countries in the region”.
Industry officials say the ratio of insurance penetration in Pakistan stands at 0.5 per cent of gross domestic product (GDP) compared to 2.6 per cent in India.
The ombudsman report suggested that “fathoming the depths of demographic structure of Pakistan for increasing penetration of insurance business is the key to development of this important sector”. The report prodded the government into amending the Insurance Ordinance 2000 to bring state-owned insurance companies into the fold of insurance ombudsman, an exclusive forum that addresses grievances of policyholders in an efficient and speedy manner.