ISLAMABAD: The Asian Development Bank (ADB) has approved a USD 700 million policy-based loan to support reforms aimed at strengthening Pakistan’s insurance sector. The program seeks to expand insurance coverage and reduce protection gaps. It will also help stimulate private sector participation and support sustainable economic growth.
The Insurance Transformation Program will strengthen Pakistan’s financial resilience by deepening insurance markets and expanding financial protection for households, businesses, farmers, and public finances against extreme weather events, disasters, and life-cycle risks.
The reforms are expected to reduce financial vulnerabilities, support faster recovery from shocks, and lessen pressure on public finances following disasters and other crises.
According to the project document, concessional ordinary capital resources amount to USD 250 million. Insurance Sector Development Program Ordinary capital resources amount USD 450 million
The objective of the Program is to increase insurance penetration across Pakistan and to reduce the social protection gap by strengthening the insurance industry’s capacity, resilience, and efficiency. The Insurance Sector Development Program (ISDP) of USD 540 million to the government of Pakistan includes (i) a policy-based loan of USD 500 million to be delivered through a programmatic approach over 3 subprograms, and (ii) a project loan of $40 million. The Insurance Sector Development Program will support the sequencing of the reforms to (i) enhance the legal and regulatory environment for deepening the insurance sector, (ii) improve institutional capacity across the industry by enabling digitization, and (iii) create greater demand for insurance through enhanced consumer awareness and implementation of compulsory insurance schemes.
“This program supports the transformation of Pakistan’s insurance sector from a legacy, rules-based framework to a modern, risk-based, and market-oriented system,” said ADB Country Director for Pakistan Emma Fan. “The reforms will help mobilize patient capital for development, expand financial protection for households and businesses, and support a more competitive, inclusive, and resilient insurance market.”
Pakistan’s financial system remains heavily bank-dominated, while insurance penetration stands at only 0.7% of the gross domestic product (GDP). As a result, many households, businesses, and farmers remain financially exposed to environmental, health, and economic shocks.
Copyright Business Recorder, 2026
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