Pakistan’s low insurance penetration rate reflects industry challenges

The State Life Insurance Corporation in Pakistan pushes for small ticket insurance policies and online channels

According to an article in Dawn, Pakistan’s insurance industry is facing a significant challenge in reaching the country’s population, despite the high demand for insurance due to various uncertainties. 

Pakistan has a very low insurance penetration rate of just 0.91%, which is one of the lowest among regional or economic peers. The reasons for the low uptake of insurance in Pakistan are varied. One of the main reasons is religious perceptions. Many people in Pakistan believe that insurance is a form of gambling and, therefore, against Islamic principles. Additionally, distribution channels for insurance products are not efficient, which makes it difficult for insurers to reach potential customers.

However, there are some promising signs for the insurance industry in Pakistan. The public sector entity, State Life Insurance Corporation, has been an outlier and has recorded a net income of Rs9.32 billion in the first nine months of fiscal year 2022. State Life is among the largest employers in the country, with around 5,500 staff and 130,000 sales personnel registered. The company has a 52% market share in insurance in Pakistan, and premium revenue increased by 64% compared to the previous year. State Life is, by far, the largest player in the insurance market in Pakistan.

State Life’s success is partly due to its ability to innovate and offer new products that appeal to customers. The company has launched 22 new products across life and health over the past two years. One of the products that have been successful for the company is the golden endowment, which has been technically revised in terms of the premium and payout timelines. Additionally, State Life is now focusing on small ticket insurance policies that can be sold conveniently through online channels.

State Life has also launched a digital portal for policy purchases, which is available to anyone and can be paid for via card. Although the uptake is still low, the company sees potential in using digital technology to improve its internal systems, such as the claims process, which is yet another reason why people run away from insurance.

State Life is now pushing towards making insurance products more accessible to customers in Pakistan. For example, the company won the Sehat Card tender for Punjab and Khyber Pakhtunkhwa, which provides access to around 175 million Pakistanis, or two-thirds of the country’s total population. However, managing the execution of the program was a herculean task, as it required hiring and training staff and setting up service desks at every hospital.

In conclusion, the insurance industry in Pakistan faces many challenges, but State Life Insurance Corporation has been successful in overcoming some of these challenges. The company’s focus on innovation and accessibility has allowed it to grow and maintain a dominant position in the market. As the insurance industry in Pakistan continues to develop, it is essential that insurers focus on making their products more accessible to customers and improving their internal systems to increase customer trust and confidence.

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Monitoring Desk
Monitoring Desk
Our monitoring team diligently searches the vast expanse of the web to carefully handpick and distill top-tier business and economic news stories and articles, presenting them to you in a concise and informative manner.


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