Islamabad: The Competition Commission of Pakistan (CCP) has published an extensive report on the country’s insurance industry, identifying significant challenges and suggesting strategic reforms to boost competition and consumer benefits.

Globally, insurance markets are rapidly expanding, with an estimated premium volume of $7.4 trillion by 2024. However, Pakistan’s insurance penetration lags at just 0.87% in 2022, far below the global average of 6.7% and regional counterparts like India and China, which hover around 4%.

Dr. Kabir Ahmad Sidhu, Chairman of the CCP, underscored the insurance sector’s potential for economic growth, hindered by monopolistic practices and regulatory barriers. The report advocates for dismantling these obstacles to create a level playing field.

The Ministry of Commerce oversees Pakistan’s insurance industry, with regulatory authority granted to the Securities and Exchange Commission of Pakistan (SECP) following the 2000 Insurance Ordinance.

The report outlines several key issues, including the monopolization of the life insurance sector by the State Life Insurance Corporation (SLIC), which holds a 55% market share. The government’s support of State-Owned Enterprises (SOEs) like Pakistan Reinsurance Company Limited (PRCL) and National Insurance Company Ltd. (NICL) further distorts competition.

Restrictions on procuring reinsurance from abroad and the exclusive rights of NICL to insure public sector assets are identified as barriers to market entry for private insurers. The report also highlights bancassurance practices that limit competition and mislead consumers.

Jurisdictional conflicts between the Federal Insurance Ombudsman and Wafaqi Mohtasib, along with taxation anomalies, further complicate the industry’s landscape. The enforcement of mandatory motor insurance and the misuse of federal insurance fees are additional concerns.

The CCP’s recommendations include eliminating preferential treatment for SOEs, amending regulatory frameworks to allow private sector participation, and rationalizing taxes. The report also calls for stricter regulations on bancassurance practices and resolving jurisdictional conflicts.

The CCP remains dedicated to fostering competition, enhancing economic efficiency, and safeguarding consumer interests under the Competition Act.