CCP calls for reforms in insurance sector to boost competition

Pakistan should amend restrictive insurance rules, end state-owned monopolies, and abolish government guarantees for public insurers to create a fairer and more competitive market.

The Competition Commission of Pakistan (CCP) study, ‘State of Competition in the Insurance Market with Significant Presence of SOEs’, found that preferential treatment for state-backed firms has stifled private sector growth, leaving consumers with limited options and low insurance penetration.

The report recommends allowing insurers to freely choose reinsurers instead of being forced to use domestic providers, opening public property insurance to private competition, and removing federal guarantees that give State Life Insurance Corporation (SLIC) an unfair advantage.

It also calls for expanding the Federal Insurance Ombudsman’s authority to resolve disputes involving all insurers, including state-owned ones, to streamline consumer complaints.

Currently, SLIC controls 55% of the life insurance market, while the National Insurance Company Limited (NICL) holds a monopoly on insuring government assets.

Pakistan Reinsurance Company Limited (PRCL) dominates treaty reinsurance with a 25-27% market share, partly due to regulations requiring insurers to allocate 35% of reinsurance business to it.

These policies have contributed to Pakistan’s insurance penetration remaining at just 0.87% of GDP—far below regional peers like India (4%)—and per capita spending on insurance at only $14.

The report also highlights consumer harms, such as deceptive sales tactics in bancassurance and overlapping oversight between ombudsmen that delays complaint resolutions.

Dr. Kabir Ahmed Sidhu, Chairman of the Competition Commission, said the findings align with IMF-backed reforms to assess competition in key sectors. “A level playing field will drive innovation and better serve policyholders,” he noted.

The findings will be presented to policymakers for potential legislative changes to the Insurance Ordinance 2000.