Covid-19 losses: Economy to pay price for abysmally low insurance penetration

Islamabad: Leading insurance expert Tariq Hussain in a discussion organised by FPCCI said that following the coronavirus losses the economy will pay the price for low insurance penetration.

He blamed a lack of awareness and over regulation behind sluggish growth of the insurance sector therefore liberal investment environment should be introduced. Speaking at a panel discussion on video link organised by FPCCI, the keynote speaker Tariq Hussain said that insurance has not picked up in developing countries due to many reasons but Pakistan is far behind in it as compared to neighbouring countries. The primary purpose of insurance is to alleviate losses after a catastrophe, pandemic unforeseen event and help people financially to get back on their feet but here it is considered against the religion therefore Islamic insurance industry should play its role, he said.

He noted that Pakistan is prone to different kind of economic setbacks but the overall insurance penetration has remained below one percent of the GDP during the last decade, therefore the effect of risk transfer is very weak. Hussain said that there are only four companies which are capturing more than 99 percent share in general insurance leaving other 40 companies with very little, they said, adding that only one company is holding over 50 percent share in the Pakistani market.

Dr Murtaza Mughal, Convener Central Standing Committee on Insurance said SECP should relax rules and regulations to help boost insurance sector as general insurance sector is facing negative growth. He said that beyond traditional loss-based insurance covers, tailor-made approaches can efficiently balance out the negative effect of losses.