The Competition Commission of Pakistan (CCP) has released its comprehensive report on the state of competition in Pakistan's insurance industry, highlighting key challenges and offering strategic recommendations for reform.
Globally, the insurance market is expected to reach a premium volume of $7.4 trillion in 2024. The global average insurance penetration was 6.7%, while Pakistan's was only 0.87% in 2022. In comparison, India and China had around 4% insurance penetration. Pakistan's insurance density was $14 in 2022, compared to India's $82. For a population of over 240 million, only 7.8 million life insurance policies — 3% of the population — were sold in 2022.
CCP Chairman Dr Kabir Ahmad Sidhu noted that the sector is hampered by monopolistic tendencies and regulatory protectionist policies. The report recommends removing competition barriers and encouraging a level playing field. The Ministry of Commerce oversees insurance, while SECP regulates it. The Insurance Ordinance 2000 transferred industry oversight to SECP.
Key issues include monopolisation due to the 1972 nationalisation of the life insurance sector. Despite liberalisation in 1991, State Life Insurance Corporation (SLIC) holds a 55% market share and uses a sovereign guarantee as a marketing tool. Pakistan Reinsurance Company Limited (PRCL) enjoys exclusive rights to acquire 35% of reinsurance business under SRO 771(1)/2007. National Insurance Company Ltd. (NICL) has exclusive rights to underwrite public sector firms.
Restrictions on procuring facultative reinsurance from outside Pakistan and unfair bancassurance practices were also flagged. Bank-imposed limits and lack of transparency in product terms mislead customers. The Federal Insurance Ombudsman's jurisdiction is limited to private insurers, creating confusion for consumers.
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