SLOW DOWN IN PAKISTAN’S INSURANCE MARKET FORECAST

Pakistan’s non-life sector looks likely to stagnate despite recent years of double-digit growth. Analysts blamed the parallel stagnation of the country’s gross domestic product for unchanging levels of non-life insurance penetration. But other difficulties, such as entrenched state-owned and domestic private carriers, have not stopped American International Group and Allianz from setting up shop in the politically unstable but economically expanding country. Analysts pointed out, however, that first-quarter non-life results show no growth and indicated that the three largest groups may not see any growth at all through 2008. Many of Pakistan’s non-life companies are small operations, writing no more than $1m in premiums annually. Although it is known that four takaful operators have received licences since 2006, it is not clear if they are writing significant amounts of business and it remains far from certain if these players will outdo general market conditions. Meanwhile, in Bangladesh the insurance market looks more optimistic. Last week its parliamentary cabinet approved law to form an insurance regulatory authority for a three-year term.