Climate risk spurs insurance need
Experts underscored the need to promote actuarial education in Pakistan to strengthen the insurance sector, which would eventually support the development and innovation of products. photo: file
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With climate change vulnerabilities increasing, countries like Pakistan need to focus on enhancing insurance penetration to protect urban dwellers as well as farmers from extreme weather patterns.
Talking to the media, Society of Actuaries (SOA) Managing Director Andrew Peterson stressed the need for introducing more insurance products related to damages occurring due to climate change. Accompanying him, SOA Regional Director Zain Ibrahim referred to the recent hailstorm in Islamabad and said that threats from extreme weather conditions were not limited to rural areas, crops and mountains that had faced flash floods.
"Those having ordinary cars or solar panels need insurance cover as well," Ibrahim emphasised, adding that there was a gap between the insurance sector and the general public in Pakistan.
Experts highlighted that farmers lacked adequate knowledge of the available crop insurance products, while insurance companies also appeared to be engaged in limited activity in the sector.
However, he pointed out that a number of companies were offering insurance products in Punjab and Khyber-Pakhtunkhwa for flood and drought mitigation – a much-needed solution in Pakistan and the region, which was even more critical than theft insurance.
They underscored the need to promote actuarial education in Pakistan to strengthen the insurance sector, which would eventually support the development and innovation of products. SOA was established in 1889 and currently it has over 34,000 members. Its mission is to advance actuarial knowledge and help actuaries offer relevant, expert advice on financial and societal challenges.
Actuaries are experts who use mathematics, statistics, predictive analytics, economics and finance to analyse risk and make informed decisions. Actuaries play crucial roles in industries such as insurance, banking, healthcare, consulting and public policy.
"The key job of actuaries is to design and validate financial models, helping businesses turn risk into opportunity," Peterson said. He called on Pakistani youth to attain actuarial education, adding that the profession had global demand too.
Some of the SOA initiatives in Pakistan include discounts on exams and preparatory materials to become an actuary, offering scholarships to promising students and engagements with local universities to create awareness and build capacity.
Pakistan has witnessed growth in the actuarial profession, with a 17% increase in candidates appearing for the SOA examination in 2024. Currently, there are over 1,700 Pakistan-based SOA affiliate members.
"The demand is set to rise sharply as SECP (the Securities and Exchange Commission of Pakistan) mandates every insurance firm to establish an 'actuarial function'," Ibrahim added.
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