The insurance sector in Pakistan is contributing to economic and social progress by compensating for losses of different types and magnitudes. Additionally, insurance companies invest their resources in various markets in Pakistan, generating long-term financial benefits. By transferring risk, insurance enables both individuals and large industrial, commercial, and trade ventures to safeguard themselves against losses and continue their operations, even in the face of catastrophic events such as earthquakes, floods, severe weather conditions, etc. This has a positive impact on the economy.
The insurance sector in Pakistan is bifurcated into two distinct businesses based on significant differences in the nature of the two businesses i.e. life insurance/family takaful business and non-life insurance/general takaful business. Life insurance/family takaful is about insurance against death, sickness, or disability of natural persons whereas non-life insurance is more inclined towards insurance of assets and liabilities. As of 2021, there are 28 authorized non-life insurance providers in the country.
By the end of December 2021, the insurance industry in Pakistan had total assets worth Rs 2,149 billion, an increase of 8 percent from Rs 1,987 billion recorded on December 31, 2020. On the revenue front, the industry underwrote a total direct Gross Written Premium (GWP) of Rs433 billion in 2021, which is a growth of around 24 percent from Rs 347 billion in 2020. A sector-wise analysis reveals that the life insurance industry in Pakistan owns assets worth Rs 1,845 billion, while the non-life insurance sector has assets worth Rs 304 billion. As for revenue, the life insurance sector underwrote premiums amounting to Rs 291 billion, while the non-life insurance sector recorded premiums of Rs 142 billion during the year 2021. The class share for Motor insurance was Rs 32 billion making 24% of the whole non-life sector.
As per the Pakistan Bureau of Statistics, there are over 30 million registered vehicles in the country. Among this number, 23 million are motorcycles and 7 million are motorcars (Pakistan Bureau of Statistics, 2021). According to the data collected from authorized insurance companies, against the 30 million vehicles registered, there are only 621,183 insurance policies in 2021 and 650,282 policies in 2022 which insure 830,203 vehicles in 2021 and 912,994 vehicles in 2022. In accordance with this data, there are only 2.77% insured vehicles in the country in 2021 and 3.0% in 2022. Industry trends indicate that insurance policies are taken against motor cars only, this suggests that among 7 million cars 912,994 are insured making 13% of total motorcars in 2022. As evident from the above statistics, about 97% of the vehicles on the roads in Pakistan are not insured by registered insurers.
-Credit SECP
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