By Qudsia Bano
ISLAMABAD, Oct 18 (Wealth Pakistan): Pakistan’s insurance industry continued its upward trajectory in fiscal year 2024-25, expanding both in asset size and market sophistication as new regulatory and technological reforms reshaped the sector.
According to the Governor’s Annual Report 2024-25 issued by the State Bank of Pakistan (SBP), total insurance-sector assets rose 13 percent during the first nine months of the fiscal year to reach Rs 3.75 trillion, while the Securities and Exchange Commission of Pakistan (SECP) issued the country’s first licence for a fully digital non-life insurance company — Digi Insurance Limited.
Life and Non-Life Segments Drive Sectoral Growth
The report said that both the life and non-life segments registered broad-based expansion despite subdued macroeconomic conditions earlier in the year.
Life insurance remained dominant, representing over 85 percent of total sector assets. Its asset base grew 13.2 percent, driven by continued inflows into savings-linked and family-protection products.
The non-life segment also performed strongly, with assets up 11.9 percent amid rising demand for health, motor, and property coverage.
The SBP noted that the overall improvement reflects a gradual deepening of risk-management culture in households and enterprises across Pakistan.
Takaful Expands as Ethical Finance Gains Momentum
The report highlighted significant progress in Shariah-compliant insurance (takaful) offerings.
Family Takaful products expanded their share to 15 percent of the life market, while General Takaful reached 14 percent of the non-life portfolio.
The SBP said that the rising popularity of takaful reflects strong consumer preference for ethical finance and aligns with Pakistan’s broader strategy to strengthen Islamic financial systems.
Regulatory Reforms Bring Global Standards
The SECP introduced major structural reforms, including transition toward risk-based supervision (RBS) and adoption of IFRS-17 Insurance Contracts, improving transparency and solvency monitoring.
Under this regime, insurers must assess capital adequacy relative to risk profiles instead of fixed thresholds — aligning Pakistan’s prudential standards with international norms.
National Insurance Scheme Planned for Informal Workers
Efforts were also intensified to expand coverage among low-income and informal-sector workers.
A proposal for a National Insurance Scheme is being developed to provide basic life and health protection to informal employees.
Parallel amendments in provincial labour laws aim to mandate group-health and accident insurance for a wider segment of the workforce, complementing Pakistan’s social-protection agenda.
Digi Insurance Marks Start of Digital Transformation
Digitalization emerged as a key milestone during FY25. The SECP’s decision to license Digi Insurance Limited — Pakistan’s first fully digital non-life insurer — marked a turning point for the sector.
Operating entirely online, Digi Insurance will issue policies, collect premiums, and process claims electronically, lowering distribution costs and reaching underserved consumers through smartphones.
The SBP termed this move a “milestone toward technology-driven inclusion,” aligning it with national digital-finance initiatives like Raast Payments Pakistan and PRISM+.
Insurance Penetration Still Low but Poised to Rise
Despite these advances, Pakistan’s insurance penetration remains at 0.7 percent of GDP, showing significant untapped potential.
The SECP plans to diversify products into agriculture, livestock, and climate-risk coverage, addressing the country’s vulnerability to extreme weather events.
The SBP emphasized that higher insurance uptake could mobilize long-term savings, reduce reliance on short-term bank funding, and strengthen the domestic capital market.
Reforms Strengthen Financial Stability and Inclusion
The report cited ongoing collaboration among the SECP, SBP, and Ministry of Finance to harmonize regulations and expand risk-transfer mechanisms such as reinsurance pools for catastrophe risks and insurance-linked collateral protection for agricultural loans.
Industry analysts attributed the sector’s resilience to disinflation, lower interest rates, and a stable exchange rate — all of which have boosted consumer confidence and long-term savings.
Outlook: Double-Digit Growth Expected
Concluding the review, the SBP said the FY25 performance demonstrates growing institutional depth and readiness for technological transformation.
With regulatory modernization, digital innovation, and expansion of Islamic finance, the insurance sector is emerging as a core pillar of Pakistan’s financial inclusion and investment ecosystem.