ISLAMABAD - The government of Pakistan and the Asian Development Bank (ADB) have signed a $700 million Policy-Based Loan (PBL) agreement for the Insurance Transformation Programme (ITP), Sub-Programme 1 (SP 1), including $250 million on concessional terms.
Government Appreciation for ADB Support
Muhammad Humair Karim Kidwai, Secretary, Economic Affairs Division, expressed appreciation for ADB’s role as a trusted development partner and its continued support to Pakistan to complement its development initiatives. He emphasized that the Insurance Transformation Program aims to strengthen the resilience of Pakistan’s financial sector and promote sustainable finance through comprehensive reforms.
The programme seeks to enhance risk management mechanisms for households and businesses while mobilizing long-term contractual savings to support capital market development and economic growth. He further emphasized that the Programme is aligned with National Economic Transformation Plan (2024-2029), i.e. URAAN Pakistan, along with the Securities and Exchange Commission of Pakistan’s 5-year roadmap for insurance sector development, Pakistan’s National Financial Inclusion Strategy, and National Climate Change Policy.
Collaborative Efforts Acknowledged
Secretary, Economic Affairs Division, commended the collaborative efforts of all stakeholders and acknowledged the valuable contributions of the Ministry of Finance, Ministry of Commerce, Securities and Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP), and the Economic Affairs Division in successfully completing the policy actions under the program.
Deputy Country Director, ADB PRM, Hussain Haider expressed appreciation for government of Pakistan’s strong commitment to this program. He emphasized the significance of this transformational program as it aims to liberalize market entry, ensure fair competition, expand private insurer participation in public assets, and strengthen regulation and consumer protection.
Objectives of the Insurance Transformation Program
Insurance Transformation Program (ITP), Sub-Programme 1 (SP 1) amounting to $700 million, 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.
Low Insurance Penetration in Pakistan
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.
The loan will support resilience initiatives and disaster risk financing by expanding inclusive and shock-responsive insurance products, particularly for farmers, women, and vulnerable households. In particular, the program will promote insurance solutions tailored to the needs of women and girls through targeted product design, digital access, and sex-disaggregated data.
Digital and Parametric Insurance Solutions
These measures aim to expand insurance coverage through digital distribution systems, satellite-based risk assessment, parametric insurance solutions, and risk-pooling mechanisms, while improving claims settlement and access to insurance services.
Additionally, the program will support the development of capital markets and private pension products by mobilizing long-term savings for infrastructure financing, bond market development, and annuity-based pension systems.
