Insurance sector: CCP embarks on competition assessment

ISLAMABAD: The Competition Commission of Pakistan (CCP) has embarked on a Competition Assessment of the Insurance Sector.

This study is being conducted under the IMF’s Public Investment Management Assessment (PIMA) framework for Pakistan. This assessment aims to evaluate the government’s footprint on key sectors of the economy through State-owned Enterprises and its implications for competition and the overall economic landscape.

The CCP’s study aims to review the competitive landscape, identify any anti-competitive practices, legal and regulatory framework, and barriers to competition in insurance sector. It will also examine the role of State-Owned Enterprises (SOEs) in insurance and reinsurance markets and analyse why this sector is underdeveloped in Pakistan and how it can be opened up to international players.

The insurance sector is vital for managing risk and capital generation. It plays a pivotal role in development of economy. Despite its significance, Pakistan’s insurance industry has yet to realize its full potential due to regulatory constraints and competition barriers.

In comparison, the UK and other countries have developed insurance markets worth trillions of dollars, employing thousands of people. Conversely, Pakistan is losing billions of rupees in potential, especially in reinsurance, which they have to pay to international companies.

The privatization of state-owned insurance firms is desirable to diminish public sector dominance, attract foreign investment and create a level playing field for the private sector to boost insurance penetration in the country. This will attract foreign insurance companies to enter Pakistani market. However, despite being on the government’s privatization agenda for several years, the privatization of insurance companies, including State Life Insurance Co. Ltd. and Pakistan Re-insurance Co. Limited, has yet to materialize.

Copyright Business Recorder, 2024