Insurance sector: CCP flags the irritants limiting competition

Business Recorder reported that the Competition Commission of Pakistan has flagged several barriers restricting competition in the insurance sector, despite considerable room to expand. According to the CCP's draft sector assessment, outdated protections, low buyer trust and inconsistent enforcement leave millions without insurance cover. Stakeholder consultations are still refining the findings, which are expected to shape proposals for the federal government.

Penetration stands at 0.87 percent of GDP, with density near USD 14 per person against USD 82 in India and USD 134 in Türkiye. Preferential arrangements also distort competition, the draft says. The State Life Insurance Corporation controls roughly 55 percent of life business, backed by a federal guarantee, while National Insurance Company Limited has exclusive access to public-property cover. Insurers must also place a minimum of 35 percent of treaty reinsurance with Pakistan Reinsurance Company Limited, which holds first refusal rights.

Consumer trust is another hurdle, as bancassurance made up 2,729 of 4,579 life complaints logged with the Federal Insurance Ombudsman in 2022. Some of these complaints involve policies allegedly sold as deposits or investments, with risks poorly disclosed. Motor third-party cover is weakly enforced, with only about three percent of more than 30 million vehicles reportedly insured. Provincial sales tax and a federal charge of one percent on non-life policies add to costs, while the consultation weighs competition-neutral rules and digital verification.