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Insurance is a form of risk management, a fundamental function of entrepreneurial activity, used to hedge against the risk of an uncertain loss. It plays a vital role in the socio economic development of any society/nation; contributes materially to economic growth by improving the investment climate; important function as an institutional investor providing capital for long term investments (source: what is the role of insurance in economic development Lael Brainard) and provides various social security products to members of a society. The insurance industry comprises of general and life insurers. At the time of independence, there were five domestic and 77 foreign companies operating in the insurance sector. In 1973, the government focused on strengthening the life insurance sector and established State Life Insurance Corporation (SLIC), a public sector entity. In the non-life sector, the government set up the National Insurance Company in 1976. In 1992, the government opened the life insurance sector to private ownership. Today, life and non-life insurance companies are permitted to be incorporated with 100% foreign ownership.

Takaful (Islamic Insurance)

In 2005, the SECP notified Takaful (Islamic Insurance) Rules to cater to the growing segment of Islamic products. According to a report by Deloitte, the world Takaful market is expected to reach USD20bn by 2020. The report also highlights that in 2010 the Far East region posted the highest growth of 32% while the GCC, led by Saudi Arabia’s contribution increased by 17%. The report also states that in the same year the GCC states contributed 40% to the Takaful business where as South East Asia’s share was 11.8%.

Pak Kuwait Takaful was the first general Takaful company established in Pakistan in 2006. In 2007, Pak Qatar Family Takaful became the first company to offer family Takaful products.


Bancassuarance is a term used to describe the relationship between a bank and an insurance company whereby the insurance company uses the bank’s sales channel to sell its insurance products (Wikipedia). In Pakistan, the history of life Bacassurance starts from the 1990s with major growth starting from 2005. In 2010, the SECP introduced Guidelines for Bancassurance in the country.

Micro Insurance Products

Under non-life insurance/Takaful main insurance products include fire & property, marine, motor. During 2010, motor insurance accounted for the highest share in the non-life segment at 44% followed by property at 22% (source:psoa). Other types of insurance coverage also include health, travel, crop, live stock and engineering insurance. In addition to life insurance, products catering to family need i.e. education, marriage, savings and retirement plans are also available.