Islamabad, The Securities and Exchange Commission of Pakistan (SECP) has released a comprehensive report titled “Securing Livelihoods: A Comprehensive Look at Crop and Livestock Insurance in Pakistan and the Way Forward,” which addresses the urgent need for expanded agricultural insurance coverage in the country. This detailed analysis points to the significant underdevelopment of the sector, which currently comprises only 2% of total non-life insurance premiums despite agriculture’s substantial contribution to the national economy.
According to Securities and Exchange Commission of Pakistan, the report outlines the critical role of agriculture in Pakistan’s GDP, making up 23% of it, with livestock alone accounting for 63% of that figure. However, the sector is plagued by numerous risks, including climate change impacts, floods, droughts, and pestilence, which are compounded by high input costs. Despite the prevalence of agricultural insurance in over 100 countries globally, Pakistan’s insurance mechanisms cover just 14% of its farmers, highlighting a stark gap in protection that leaves many vulnerable.
The SECP’s report reviews existing government-led insurance schemes and notes several pilot initiatives from the private sector. It identifies key challenges hindering the growth of agricultural insurance, such as the insurance industry’s limited capacity to absorb substantial agricultural losses and a general lack of robust data for insurers to accurately measure risks.
To overcome these obstacles, the SECP recommends a reevaluation of current insurance schemes and suggests creating insurance pools or consortiums to spread risks more effectively. The report advocates for a mandatory national crop insurance initiative and a nationwide livestock insurance program, which should include graduated subsidies to aid subsistence farmers. It also proposes integrating these insurance measures into the government’s broader social protection initiatives and aligning them with national disaster risk financing and food security policies.