The Competition Commission of Pakistan (CCP) has initiated a comprehensive competition assessment of the insurance sector as part of the IMF’s Public Investment Management Assessment (PIMA) framework for Pakistan, Business Recorder learnt on Monday.
The study aims to evaluate the government’s impact on key sectors of the economy through the state-owned enterprises (SOEs) and its implications for competition and the overall economic landscape.
“The CCP’s study will review the competitive landscape of the insurance sector, identify any anti-competitive practices, assess the legal and regulatory framework, and examine barriers to competition,” a CCP official told Business Recorder.
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Additionally, the study will analyse the role of SOEs in the insurance and reinsurance markets, and explore ways to open up the sector to international players.
Despite its significance in managing risk and capital generation, Pakistan’s insurance industry has yet to realise its full potential due to regulatory constraints and competition barriers.
In contrast, countries like the UK have developed trillion-dollar insurance markets, employing thousands of people. Pakistan, on the other hand, is losing billions of rupees in potential, especially in reinsurance, which is paid to international companies.
The privatisation of state-owned insurance firms is seen as a way to reduce public sector dominance, attract foreign investment, and create a level playing field for the private sector to enhance insurance penetration in the country.
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However, despite being on the government’s privatisation agenda for several years, the privatisation of insurance companies, including State Life Insurance Co. Ltd. and Pakistan Re-insurance Co. Limited, has yet to materialise.
The CCP is currently analysing the legal and regulatory frameworks of five other sectors of the economy, including fertiliser, power, road construction, and Liquefied Natural Gas (LNG), with an aim of opening up these sectors to international players and enhancing competition.
The recommendations from the insurance sector study will be submitted to the federal government in due course, with the hope of fostering a more competitive and vibrant insurance market in Pakistan.
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