Finance Minister urges Pakistan to adopt new insurance trends

December 13, 2023 (MLN): Pakistan needs to track and embrace emerging trends in the insurance sector, as the risks are growing, both globally and nationally, demanding adequate coverage for people and businesses, Federal Minister for Finance Dr. Shamshad Akhtar said in her keynote address at SECP’s conference on Tuesday.

Referring to the ENY 2023 global outlook report, she suggested that due to widespread economic uncertainty, disruption, and proliferating risks, trust and transparency, increased regulatory scrutiny, and rising investor expectations can help the insurance sector decrease risks and challenges and achieve stronger financial results.

The global insurance industry is undergoing technological advancements, evolving customers’ expectations, and a pressing need for sustainable practices.

Dr. Shamshad said Pakistan needs significant transformation in the insurance industry to address its fundamental challenges while catching up with global trends to maximize the value proposition of this industry.

She advised concentrating on lifting the low penetration ratio of the insurance industry.

It is a sobering fact that Pakistan's penetration rate stands at below one percent, which places us among the lowest in our region and economic counterparts.

She said there is a need to enhance competition by offering a level playing field for private operators and reducing public dominance.

Referring to SLIC's 53% share, which dominates the market, she pushed the agenda of privatization to bring FDI investments into the insurance sector.

There should be consolidation of policy, legal, and regulatory under one hub, as it is fragmented.

She asked for the need to further dissect the landscape of the insurance sector in Pakistan.

Due to low penetration and a lack of awareness, we don't see much foreign investment in the industry.

She said that SECP’s 5-year strategic plan will set the tone for future policy, legal, and regulatory landscapes.

Incorporating the recommendation of the insurance industry reform committee would be a step in the right direction, which will promote embracing global trends.

She suggests focusing on mainstreaming global best practices, reducing the cost of doing business, digitizing the salesforce, and making effective use of technology generally.

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