Minister underscores urgent need to modernize insurance sector

ISLAMABAD: Federal Minister for Commerce Jam Kamal Khan has stressed the urgent need to modernize Pakistan’s insurance sector in line with changing economic realities, underlining that wider insurance coverage and an updated regulatory framework are essential for national growth.

He was speaking at a briefing jointly organized by the Ministry of Commerce’s Insurance Wing and the Securities and Exchange Commission of Pakistan (SECP), where a presentation was made on the proposed amendments to the Insurance Ordinance, 2000.

The reforms, prepared after extensive consultations with stakeholders, are set to be submitted to the Federal Cabinet for in-principle approval.

Jam Kamal Khan highlighted that Pakistan’s insurance penetration remains very low compared to regional economies, and called for greater awareness, innovation, and regulatory modernization to expand outreach. “Insurance is not just a financial tool, it is a safety net for individuals and businesses. Pakistan must increase its coverage to support inclusive economic growth,” he remarked.

The proposed Insurance Ordinance (Amendment) Bill introduces wide-ranging reforms across four major areas: (i) opening of the insurance market to greater competition, including entry of foreign insurers and reinsurers, recognition of microinsurers and digital-only insurers, and allowing private participation in public sector risks; (ii) promoting ease of doing business, use of technology, and development of new products such as index-based insurance and disaster risk coverage; (iii) simplifying the primary law by shifting operational details to regulations, making the framework more flexible and principle-based; (iv) strengthening supervisory oversight through a risk-based capital framework, solvency requirements, improved governance, and enhanced SECP enforcement powers.

The amendments also aim to align the law with other financial legislations, including the Companies Act 2017 and the Federal Ombudsmen Institutional Reforms Act 2013, while enabling Pakistan’s insurance sector to comply with global best practices.

The minister noted that a stronger insurance market will not only protect citizens and businesses but also mobilize long-term savings and investments, which are crucial for sustainable economic development. He reaffirmed the government’s commitment to creating an enabling environment where the insurance industry can innovate, expand outreach, and contribute effectively to Pakistan’s economy.

Copyright Business Recorder, 2025