KARACHI, Oct 16: The Securities and Exchange Commission of Pakistan (SECP) is in the process of formulating a regulatory framework for the micro-insurance sector as risks to economic development would not be safeguarded if the insurance needs of low-income people are not met, it said on Tuesday during a roundtable discussion on this issue.
SECP also launched a diagnostic study, with assistance from FIRST Initiative/World Bank, which analysed the demand and supply side of micro insurance, where it currently stands and where it needs to be taken.
Addressing the meeting SECP Commissioner Insurance Mohammad Asif Arif said that a conducive and enabling regulatory environment is required for the development of microinsurance and that it is extensively working in the area of developing the microinsurance segment, including the regulatory framework for this important line of business.
Arif added that the microinsurance products will also provide an opportunity for small farmers to get their crops and livestock insured against the natural calamities such as floods.
In Pakistan, where insurance penetration is just 0.8 per cent of GDP, it is anticipated that this initiative will help in creating a transparent and enabling environment thereby increasing the insurance density and affordable outreach to low-income people, and alleviation of poverty.
Nadeem Hussain, Vice Chairman, Pakistan Microfinance Network said that it has also been proved by the recent floods in Pakistan where, in the absence of proper insurance coverage, the economic losses suffered by the masses had an adverse effect on the overall financial and economic stability. He said that such incidents may be seen as threats but at the same time these are opportunities for the insurance industry to shoulder the economic burden of the government yet keeping it profitable for itself.