Insurance seen as expansion opportunity for local banks

Although Pakistan’s insurance market is underdeveloped relative to its potential, it has shown promising growth in the recent past. For example, growth in 2005 was 25.5% compared with 2004. The increase of only 16% in 2007 reflected a downturn in the economy and an insecure political situation, which affected investor confidence. For the time being insurers are planning better product distribution through alliances with banks and financial institutions, improved e-commerce and developing call centres. Banks’ confidence in the future of bancassurance has been emphasised by the fact that four new insurers have been set up by bank promoters. There are also signs that some insurers are making efforts to control their expenses and push up premium rates

According to the market regulator, the Securities and Exchange Commission of Pakistan (SECP), there were five life offices, 49 non-life insurers, two non-life takaful and one professional reinsurance company working in the market at June 2008,. Of the 49 non-life insurers, two are wholly foreign owned, ACE and New Hampshire (AIG). The latter has a branch operation.