Pakistan’s Securities and Exchange Commission (SECP) has released a report titled “Unlocking the Potential of Micro and Inclusive Insurance in Pakistan.” The report highlights the vast, untapped potential of this market segment and aims to chart a course for growth.
The report paints a concerning picture of the current state of micro-insurance. While over 12 million insurance policies were sold through microfinance institutions, a staggering 89% were credit life insurance, simply protecting lenders in case of loan defaults. Only a handful of insurers actively offer affordable micro-insurance products beyond credit life, and digital distribution remains limited.
“Inclusive insurance is crucial for increasing overall insurance penetration,” stated SECP’s Commissioner of Insurance, Aamir Khan. The report delves into the potential for micro-insurance to expand financial inclusion, comparing Pakistan’s market to others and identifying areas for improvement.
The report emphasizes collaboration as key to success. Collaborative efforts are needed to streamline regulations, raise public awareness, and improve product accessibility, particularly through digital channels. Partnering with mobile network operators, for example, could leverage their extensive reach and infrastructure. Amending existing Microinsurance Rules and maximizing technology are also seen as crucial steps.
SECP, the insurance industry, and other relevant authorities are prioritizing the development and implementation of policies that foster micro-insurance growth. The report proposes a “synergy group” involving insurers, insurance technology (InsureTech) companies, and the government to ensure underserved populations have access to these vital financial products.
The report, available on the SECP website, provides a roadmap for unlocking the immense potential of micro-insurance in Pakistan. By addressing existing gaps and working collaboratively, stakeholders aim to make financial security a reality for a wider segment of the population.
