ISLAMABAD: Pakistan’s insurance sector is severely underdeveloped, with less than one percent of the country’s gross domestic product covered by insurance policies, the country’s securities regulator said on Tuesday.
The Securities and Exchange Commission of Pakistan (SECP) said the gross premium for the entire nation amounted to only Rs553 billion, with Rs375 billion attributed to the life insurance sector.
The regulator highlighed the need for more coverage in areas such as micro-insurance, livestock insurance disaster and terrorism in a media briefing on the state of the insurance industry.
The SECP said there were 42 insurance companies operating in the country, but expressed concern about a large number of fake policies that existed only to meet formalities in various sectors.
Breaking down the composition of insurance companies, 27 percent operated in the non-life sector, 23 percent focused on fire protection, 17 percent dealt with motor vehicle tax, 13 percent were engaged in the marine and aviation sector, and 12 percent covered accidents and health.
SECP officials attributed the low insurance penetration in Pakistan to outdated laws, inadequate implementation, lack of public awareness, and insufficient regulatory oversight by the regulator.
Akif Saeed, Chairman of SECP, underscored the commitment to the growth of the insurance sector, acknowledging its complexity and multitude of stakeholders.
Saeed stated, "SECP is dedicated to establishing a systematic and self-sustainable architecture for the entire insurance sector."
Amir Khan, Commissioner of Insurance, outlined SECP's key objectives for the next five years, focusing on policyholder protection, resilience building, innovation, cooperation, transformation, and enhanced insurance coverage.
Khan highlighted the outdated Motor Vehicle Third Party Insurance law enacted in 1939, urging the need for an upgrade to ensure adequate compensation in the event of road accidents.
Waseem Khan, Director of the Insurance Division, revealed SECP's ongoing efforts to achieve operational and strategic outcomes.
He stressed the necessity of insuring all public buildings, particularly in light of frequent natural disasters, with insurance claims utilized for reconstruction.
Simultaneously, it was disclosed that the Ministry of Commerce oversees the insurance sector, and the SECP has regulated the industry since 2000. However, draft insurance laws have remained pending with the government since 2014.