ISLAMABAD: The effective implementation of insurance laws is the need of the hour, the Securities and Exchange Commission of Pakistan (SECP) chairman said on Thursday, stressing that the sector “has a long way to go”.

“We have written to all the four provinces to implement the third-party insurance for motor vehicles but we haven’t yet received their response,” Zafar Hijazi said while addressing a workshop organised for journalists.

The provinces were also not implementing several other laws, including group insurance for the industrial workforce, he said. “Insurance serves a number of valuable economic functions that are largely distinct from other types of financial intermediaries.”

Ali Azeem Akram, the head of SECP’s insurance division, informed the participants that insurance premiums in Pakistan have grown at 15 per cent over the last five years. “But the penetration of insurance is still very low from regional standards,” he added.

The penetration of life insurance is a mere 0.51pc of gross domestic product while that of non-life insurance is 0.26, both values being the lowest in South Asia. The insurance density, which is per-capita expenditure on insurance measured as a ratio of premium to population, is 10.40, also the lowest in the region.

To improve the situation, the SECP has translated insurance laws and other related information in Urdu for easy understanding of policyholders, he said. Moreover, to ensure improved corporate governance, the SECP has recently introduced a code of corporate governance for the insurance industry, and a centralised information sharing mechanism to ensure standards, he said.

Published in Dawn, April 29th, 2016