Islamabad, August 1, 2023 – Car insurance coverage in Pakistan is shockingly low at a mere three percent, lagging far behind other major regional economies, according to a recent study conducted by the Securities and Exchange Commission of Pakistan (SECP).
The study, known as the Diagnostic Study, was released with the aim of providing a comprehensive overview of the motor third-party insurance landscape in the country.
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The Diagnostic Study’s primary objective is to shed light on the legal framework governing motor third-party insurance, assess the current state of motor insurance, identify obstacles in its implementation and enforcement, highlight recent initiatives taken by the SECP, and present recommendations for the way forward.
In Pakistan, motor insurance coverage has remained stagnant at a paltry three percent, indicating a pressing need for immediate attention and corrective action. The study calls for policy recommendations to address this concerning issue and proposes a multifaceted reform agenda.
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One key recommendation of the study is the effective implementation of existing laws related to motor third-party insurance. Simultaneously, it emphasizes the importance of amending the outdated Motor Vehicles Act of 1939 to further enhance the scope and efficacy of the insurance coverage.
To compile the Diagnostic Study, the SECP engaged in extensive data collection and conducted consultations with insurance companies, facilitated through the Insurance Association of Pakistan. The collaborative approach sought to involve all relevant stakeholders, including central and provincial authorities, SECP officials, and representatives from the insurance sector.
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With the Diagnostic Study now available, the SECP hopes it will serve as a catalyst for meaningful discussions and collaborative action planning among all key stakeholders. By fostering cooperation and joint efforts, the goal is to achieve a more comprehensive and effective implementation of motor third-party insurance in Pakistan.
The study’s findings have drawn attention to a critical issue that requires immediate attention from policymakers and insurance industry players. It is anticipated that the study’s recommendations will pave the way for crucial reforms in the motor insurance sector, ultimately benefiting the general public and promoting a safer driving environment in the country.
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As Pakistan moves forward, addressing the inadequacy in car insurance coverage will remain a top priority for regulators and the insurance sector, and this study is expected to be a foundational resource guiding future actions in this vital area.
