Reshaping economy impossible sans strong insurance industry: FPCCI

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Low insurance penetration behind sluggish economic growth: Industry expert
Heavy taxation, rigid requirements keeping insurance sector weak: Hisham

Insurance sector employs more than 100,000 people directly and contributes around Rs20 billion in various taxes and duties to the national exchequer, an industry expert said Wednesday.

Pakistan insurance sector has one of the lowest insurance penetrations in the region which is holding economy back, said Muhammad Hisham, Chairman Lahore Insurance Institute

Talking to Dr. Murtaza Mughal, Convener FPCCI Central Standing Committee on Insurance, he said that policy problems are impeding growth of this critical sector which include heavy taxation of over 17 percent on most general insurance business which include high incident of taxation on health insurance.

He said that national assets are not allowed to be insured by private companies which is resulting in absence of level playing field and losses to the government.

Moreover, third party motor insurance in not compulsory in Pakistan as is mandatory in other counties, he said, adding that Pakistan has one of the lowest premium retention and premium is sent abroad mostly for large risks which causes huge foreign exchange loss to the country.

Muhammad Hisham said that federal insurance fee is not spent on development of insurance sector and training of staff and unusual compliance requirements are set for general insurance companies which are very difficult to follow by small establishments.

He said that the government should create pools for flood and natural catastrophe insurance with the help of private sector and insurance sector should be recognised as industry and incentives should be given to boost it for potential employment of another 100,000 people.

At the occasion, Dr Murtaza Mughal said that government cannot reshape economy to meet the challenges of a global marketplace unless the insurance sector is strengthened.

He said that the government should support insurance industry to boost economic activities with focus on takaful sector which is still infant as Pakistan was a late starter of takaful products.

Dr. Mughal said that the global takaful market reached a value of US$ 23.7 Billion in 2019 but it is just a few billion in Pakistan.

In: Pakistan Economy WatchAuthor: pakistaneconomywatch