Key Takeaways
- Industry experts urge stronger collaboration between government and insurance sector.
- Pakistan faces significant climate-related losses, with crop damage averaging $1.3 billion annually.
- Need for a national risk-sharing framework highlighted by industry leaders.
Experts at the 1st International Insurance Conference in Karachi have called for increased collaboration between the government and insurance industry to mitigate growing climate risks. The conference, which focused on climate and catastrophe insurance, emphasized the need for a comprehensive risk-sharing mechanism involving public and private sectors.
Javed Ahmed, Managing Director and CEO of Jubilee Life Insurance, highlighted that Pakistan has suffered average annual crop losses of around $1.3 billion over the past decade due to climate change. He noted that these losses have been exacerbated by recent floods, which resulted in crop damage exceeding $3 billion last year—nearly three times the total annual insurance premium generated by the local industry.
Ahmed stressed that without active government support, the underwriting capacity of the local insurance industry is insufficient to manage such large-scale risks. He also identified low public awareness as a significant challenge, noting that insurance companies paid more than Rs300 billion in claims last year.
Kamran Arshad Inam, CEO and Managing Director of EFU General Insurance, proposed the establishment of a national insurance pool comprising government, private insurers, and international reinsurance firms. He cited Sindh’s mandatory third-party motor vehicle insurance scheme as an example of successful cooperation between public and private sectors.
Johan Thorpe, Senior Vice President at Guy Carpenter, highlighted the importance of strengthening the government's role in promoting insurance penetration while empowering regulators to safeguard policyholders' interests. He also warned about emerging cyber risks, urging insurers to develop stronger mechanisms for managing these threats.
Thorpe emphasized the need for insurers to simplify their products and claims processes through the use of artificial intelligence and digital technologies to enhance efficiency and customer experience. He noted that alongside climate-related threats, cyber risk has emerged as a major global challenge due to increasing cyberattacks and online fraud.
Hatim Maskawala, CEO of Badra Management Consultancy, identified several structural challenges facing Pakistan’s insurance industry, including low public trust, religious concerns, and weaknesses in documentation. He highlighted the need for both conventional insurers and Takaful operators to ensure timely claim settlements and consistent commitment to policyholders.
The experts agreed that a national risk-sharing framework is essential to effectively manage climate-related risks. They emphasized the importance of collaboration between government, private sector, and international partners to build resilience against future disasters.
Insurance should not be viewed merely as an expense. It is a financial tool for managing risk, protecting future goals and improving financial security.
Javed Ahmed, Managing Director and CEO of Jubilee Life Insurance
Pakistan needs a national insurance pool comprising the government, private insurance companies and international reinsurance firms to effectively manage climate-related risks.
Kamran Arshad Inam, CEO and Managing Director of EFU General Insurance
