Which country has the lowest insurance penetration globally?
Pakistan is the country where the insurance sector penetration (life and non-life) is less than one percent of GDP, and its gross premium is only $1.9 billion, which is almost the lowest in the world.
The Securities and Exchange Commission of Pakistan (SECP) said it is 0.87 percent of GDP. The regulator attributed it to outdated laws, inadequate implementation, lack of public awareness, and insufficient regulatory oversight by the regulator.
Akif Saeed Chairman of SECP however affirmed the commitment to the growth of the insurance sector and said that Pakistan’s insurance was a complicated sector with too many stakeholders.
Saeed stated, “SECP is dedicated to establishing a systematic and self-sustainable architecture for the entire insurance sector.” A lot of paperwork and a lack of digitization also discourage people from getting involved and taking policy, the SECP–the regulator of the sector said.
This South Asian nation is facing a lack of coverage in critical areas such as micro-insurance, livestock insurance, and protection against losses from disasters and terrorism.
In Rupees terms, the gross premium of the country is Rs553 billion, with Rs375 billion ($1.3 billion) attributed to the life insurance sector.
Presently, there are 42 insurers in the country, but a substantial number of spurious policies exist merely to fulfill formalities in various domains. Around 27 percent operated in the non-life sector, 23 percent focused on fire protection, 17 percent dealt with motor vehicle tax, 13 percent were engaged in the marine and aviation sector, and 12 percent covered accidents and health.
Amir Khan Commissioner of Insurance highlighted the key objectives of SECP for the next 5 years which revolve around the areas of policyholder protection, building resilience, innovation, cooperation & transformation, and improved insurance coverage. Khan cited the example of Motor vehicle Third Party Insurance and said that the prevailing law was enacted in 1939 and the compensation to the deceased in road accidents was set at Rs20,000 at that time.
“The system has to be upgraded – the commuters of road transport have to be insured but in case of any eventuality, compensation is demanded from the governments,” he said.
