KARACHI: Finance Minister Dr Shamshad Akhtar said on Wednesday that public-sector dominance in the insurance sector should be reduced by privatising State Life Insurance Corporation.

Addressing the International InsureImpact Conference 2023 organised by the Securities and Exchange Commission of Pakistan (SECP), she said competition should be enhanced in insurance by offering a “level playing field” to private-sector operators.

The state-owned life insurer currently holds a market share of around 53 per cent.

“We don’t have time. We should go for privatisation as well as foreign direct investment in the insurance sector,” said the caretaker finance minister.

Insurance penetration, which shows premiums as a percentage of GDP, is only 0.87 per cent in Pakistan. In contrast, India and Sri Lanka have a penetration ratio of 3.7pc and 1.2pc, respectively. Forty-two insurance companies collected a total premium of Rs553 billion in 2022 on 10 million active policies, resulting in a meagre premium of Rs2,776 per person.

Urges end to public sector dominance in life insurance

She said the low uptake of insurance is a consequence of inadequate awareness, modest savings rate and a lack of understanding of the benefits of risk management.

“Low penetration and a lack of awareness are a manifestation of the structural rigidities of the insurance sector,” she said, adding that these are the reasons why the insurance sector hasn’t received FDI.

Dr Akhtar urged insurance companies to come up with new solutions for climate and cyber risks, low-income pre-retirees and gig workers to alleviate pressure from strained public pension systems.

“In a disaster-risk-prone country like Pakistan, the significance of insurance cannot be overstated. It provides individuals, businesses and communities with a much-needed financial cushion during times of crises,” she said.

By providing insurance coverage for climate-related risks, such as floods, droughts, rain and wildfires, insurers can help individuals and businesses recover from disasters and rebuild their lives, she said.

She invited insurance companies to work with federal and provincial governments to develop risk mitigation strategies by investing in infrastructure that’s able to withstand the impacts of climate change.

She urged insurance companies to incentivise sustainable behaviour through risk-based pricing models and innovative insurance products. For example, offering lower premiums to homeowners who implement energy-efficient measures or discounts for businesses that adopt sustainable practices can encourage a shift towards more environmentally conscious behaviour, she said.

Speaking on the occasion, SECP Chairman Akif Saeed said the five-year plan rolled out by the insurance division of the regulator aims to capitalise on the digital ecosystem, increase the outreach of insurance, achieve growth of Takaful and enhance the reinsurance capability of the sector.

Published in Dawn, December 14th, 2023

QOSHE - FM Shamshad calls for privatising State Life - Kazim Alam
menu_open
Columnists Actual . Favourites . Archive
We use cookies to provide some features and experiences in QOSHE

More information  .  Close
Aa Aa Aa
- A +

FM Shamshad calls for privatising State Life

20 0
14.12.2023

KARACHI: Finance Minister Dr Shamshad Akhtar said on Wednesday that public-sector dominance in the insurance sector should be reduced by privatising State Life Insurance Corporation.

Addressing the International InsureImpact Conference 2023 organised by the Securities and Exchange Commission of Pakistan (SECP), she said competition should be enhanced in insurance by offering a “level playing field” to private-sector operators.

The state-owned life insurer currently holds a market share of around 53 per cent.

“We don’t have time. We should go for privatisation as well as foreign direct investment in the insurance sector,” said the caretaker finance minister.

Insurance penetration, which shows premiums as a percentage of GDP, is........

© Dawn Business


Get it on Google Play