SECP to host global conference to foster insurance industry growth

KARACHI: The government plans to more than double its insurance penetration rate to 1.5 percent by 2028, tapping into a largely untapped market of over 230 million people, the securities regulator said on Tuesday.

The Securities and Exchange Commission of Pakistan (SECP), the regulator of the insurance sector, has drafted a 5-year strategic plan that aims to increase the number of people and assets covered by insurance, promote digital and Islamic insurance, and introduce new products such as crop, disaster, and annuity insurance.

The SECP will host the International InsureImpact Conference 2023 in Karachi on December 13 and 14, 2023, with the broad theme of "Journey to an Insured Pakistan."

Federal Minister of Finance and Revenue Dr. Shamshad Akhtar will kick off the two-day conference. Policymakers and experts from the global insurance and ancillary industries from countries such as Turkey, the Philippines, Saudi Arabia, the UAE, Bahrain, and Luxembourg are expected to participate.

SECP Chairman Akif Saeed said the insurance industry is an important component of Pakistan's financial sector and needs to be reenergized to meet the future needs of the modern insurance industry.

"The vast unexplored market is a tremendous opportunity, and the International Insure Impact Conference provides critical insights into the most recent global strategies, solutions, and innovations," Saeed told a media gathering in Karachi.

SECP Commissioner Insurance Aamir Khan said the SECP, through its five-year plan, aims to boost insurance penetration in Pakistan by utilizing technology, raising awareness about insurance products, and promoting crop and disaster risk insurance.

Khan cited data from SECP's studies on various insurance sectors, which revealed that out of 30 million registered vehicles in Pakistan, barely 3 percent are insured, and out of 241 million people, less than 8 million have life insurance.

"Crop insurance is used by less than 10 percent of the 8 million farmers, and less than 500,000 of the 32 million registered properties are insured." Waseem Khan, Director Insurance Division at SECP, gave an overview of the draft 5-year strategic plan.

He said the plan is designed to overcome major challenges faced by insurance companies and policyholders and to develop and align the market with international standards by 2028.

"Through the 5-Year Strategic Plan, the number of lives covered will be raised to over 15 million individuals, insurance penetration is targeted at up to 1.5 percent, the share of digital distribution will rise to 5 percent, the share of Takaful in the overall insurance sector is targeted at above 30 percent, and motor third party insurance coverage will be above 20 percent."

He said the plan aims to increase the local retention ratio of insurance to below 60% and the private health insurance premium to over 15 percent of the total premium.

The strategic plan also includes a program to ensure the availability of agriculture insurance for non-borrower farmers, the availability of disaster insurance products, and the availability of annuity products for VPS investors and individual retirees, with a target premium growth of Rs553 billion to Rs1,221 billion by 2028.