ISLAMABAD: The Asian Development Bank (ADB) has approved a $700 million policy-based loan to support reforms aimed at strengthening insurance in Pakistan.
In an official announcement, the Manila-based lending agency said the programme seeks to expand insurance coverage and reduce protection gaps. It will also help stimulate private sector participation and support sustainable economic growth.
It said the Insurance Transformation Programme will strengthen Pakistan’s financial resilience by deepening insurance markets. expanding financial protection for households, businesses, farmers and public finances against extreme weather events, disasters and life-cycle risks.
The reforms are expected to reduce financial vulnerabilities, support faster recovery from shocks,. lessen pressure on public finances following disasters and other crises, it said.
“This programme supports the transformation of Pakistan’s insurance sector from a legacy, rules-based framework to a modern, risk-based,. market-oriented system,” said ADB Country Director for Pakistan, Emma Fan.
“The reforms will help mobilise patient capital for development, expand financial protection for households. businesses, and support a more competitive, inclusive, and resilient insurance market,” the official added.
According to the ADB. Pakistan’s financial system remains heavily bank-dominated, whileinsurance penetrationstands at only 0.7 per cent of the gross domestic product (GDP). As a result, many households, businesses, and farmers remain financially exposed to environmental, health and economic shocks.
It said the loan will support resilience initiatives. disaster risk financing by expanding inclusive and shock-responsive insurance products, particularly for farmers, women and vulnerable households.
In particular, the programme will promote insurance solutions tailored to the needs of women. girls through targeted product design, digital access and sex-disaggregated data, it said.
These measures aim to expand insurance coverage through digital distribution systems, satellite-based risk assessment, parametric insurance solutions. risk-pooling mechanisms, while improving claims settlement and access to insurance services, the ADB said.
Additionally, the programme will support the development of capital markets. private pension products by mobilising long-term savings for infrastructure financing, bond market development and annuity-based pension systems.
Last week, Sindh government had announced aRs14 billion financial assistancefrom the ADB for a drainage project in Thatta. Sujawal districts.
In the 2025 calendar year, the ADB had madefresh commitments worth $3.672bnto Pakistan, up 22pc from $2.995bn the previous year.
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