By Asad Cheema
ISLAMABAD: The cost of doing insurance is very high in the country which is one of the reasons behind low insurance penetration which is less than one percent of the GDP, a leading risk manager said Wednesday.
Insurance sector cannot develop as far as the products remain expansive therefore efforts should be made to offer economical products, said Ishtiaq Hussain. Talking to Dr. Murtaza Mughal, Convener FPCCI Central Standing Committee on Insurance, he said that the insurance sector should strive for reduced taxation and minimised operating cost to attract people. Ishtiaq Hussain who is CEO of a company said that an additional Sales tax of five percent should be removed on earning of agents.
He said that 12 percent withholding tax is already being deducted from the commission of agents and an additional five percent Sales Tax is unjustified as it is serving as a disincentive. Harsh taxation measures and overregulation is hampering the growth of the insurance industry which should be an important sector of the economy like other developing and developed countries, he said.
He said that coronavirus has highlighted the risk factor, therefore the government should consider making group health and group life insurance policies mandatory for some companies registered by SECP under Company Ordinance 1984. At the occasion, Dr. Murtaza Mughal said that nobody knows when or what is going to happen and not everybody has enough money to cover their losses. This is why billionaires and the biggest companies in the world have insurance to cover themselves.
He said that medical expenditure with high severity could be a significant economic shock for a poor or mediocre individuals that can be mitigated through health insurance as pandemic has exposed the weaknesses in the public health system while private hospitals are hard to afford for the majority. Reducing risk is what business insurance is all about which must be patronised by the government, he demanded.
