The Securities and Exchange Commission of Pakistan (SECP) has released a report titled “Unlocking the Potential of Micro and Inclusive Insurance in Pakistan,” shedding light on the current landscape and vast untapped market potential for inclusive insurance in the country. The draft version and synopsis of the report were presented at the International InsureImpact Conference, 2023, held in Karachi.
The data collected reveals a concerning status of the inclusive insurance market in Pakistan. A total of 12.56 million insurance policies were sold through microfinance banks/institutions, with 89 percent of these policies being credit life insurance, indicating a predominant focus on mitigating underlying credit risk. Furthermore, out of the 20 insurers offering inclusive insurance, only 4 are actively engaged in digitally distributing small-ticket products. The report delves into the realm of inclusive insurance in Pakistan, highlighting its untapped market potential, comparing it to other jurisdictions, analyzing existing gaps, and proposing a roadmap for future action.
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Commissioner Insurance, Aamir Khan, emphasized the paramount importance of inclusive insurance for overall insurance penetration growth, stating that it will encourage insurers and other stakeholders to develop products and services that promote greater financial inclusivity.
Recognizing the urgency of addressing this matter, collaborative efforts are deemed necessary to bridge regulatory gaps, streamline processes, raise awareness, and enhance product accessibility through digital distribution channels. Partnering with Mobile Network Operators could enable microinsurance providers to leverage their extensive network and digital infrastructure. The report advocates for amendments in Microinsurance Rules 2014 and leveraging technology to its fullest potential to make inclusive insurance accessible to the target market.
SECP, the insurance industry, and relevant authorities have collectively prioritized the development and implementation of comprehensive policies to facilitate inclusive insurance growth. The report proposes the formation of a synergy group involving insurance companies, InsureTech firms, and the government to ensure inclusive insurance accessibility for underserved populations. The complete report is available on SECP’s platform.
