Insurance Industry’s Gross Premium Grew by 24% in 2021

The gross premiums of the insurance industry demonstrated a growth of 24 percent during the calendar year 2021 as a result of the Securities and Exchange Commission of Pakistan’s (SECP) initiatives and regulatory reforms in the insurance sector.

The SECP’s Annual Report for year 2021-22 revealed that while the impact of regulatory reforms undertaken will be more evident in the years to come, some positive outcomes are already visible.

After a lapse of more than a decade, a new private sector life insurance company was registered under the Insurance Ordinance, 2000, to provide family Takaful services.

On the intermediary side, 16 fresh licenses were issued to new market entrants, i.e., insurance brokers (3), reinsurance brokers (1), insurance surveyors (11), and a third-party administrator for health insurance. A total of 129 life insurance products were registered, including 78 pure protection products and 23 health insurance products. Seven of the new products registered involve mobile network operators.

Three non-life insurance companies launched index-based crop insurance products in different areas of the country on a pilot basis.

The largest state-owned life insurer commenced digital distribution of its health and life insurance through its website. Insurance companies completed a detailed gap analysis by identifying operational, technical, and human resource needs in order to gear the industry toward phased implementation of the International Financial Reporting Standards (IFRS) 17.

Life insurance companies revisited the product structure of their unit-linked products by providing higher investment account allocations for insurance policy holders as a result of the promulgation of the Corporate Insurance Agent Regulation, 2020.

In order to minimize the potential of misselling insurance policies through corporate insurance agents, life insurers have commenced showing audio and video clips for the sale of regular premium life insurance policies. The report stated that necessary enhancements were made to the Centralized Information Sharing Solution for Life Insurance (CISSII), covering the claim register, risk register, and group claim register.

As of December 2021, total assets of the insurance industry stood at Rs. 2,149 billion, compared to Rs. 1,987 billion as of December 31, 2020, showing an 8 percent increase in asset size. On the revenue side, during the year 2021, the industry has underwritten total direct gross written premium (GWP) amounting to Rs. 433 billion, compared to Rs. 347 billion in 2020, demonstrating a growth of around 24 percent in GWP.

The reinsurance premium underwritten by the only non-life reinsurance company in Pakistan, owned by the government of Pakistan, amounted to Rs. 22 billion. According to sector-wise analysis, the life insurance industry’s assets amount to Rs. 1,845 billion, and the non-life insurance sector owns assets amounting to Rs. 304 billion. On the revenue side, the life insurance sector has underwritten premiums worth Rs. 291 billion and the non-life insurance sector has recorded premiums amounting to Rs. 142 billion during the year 2021, according to the SECP report.

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