Insurance sector leaders urge Aurangzeb to restore tax credits for growth

ISLAMABAD: Executives from some of Pakistan’s top insurance companies met with Finance Minister Muhammad Aurangzeb on Monday, to advocate for the reinstatement of income tax credits for the insurance sector, underscoring the need for governmental support to stimulate growth in this industry.

During their meeting at the finance division, the delegation presented several key proposals and recommendations aimed at enhancing the productivity and growth of the insurance sector. The session included participation from senior officials within the government.

The CEOs urged the need for reforms in capital gains and dividend taxation and requested exemptions from minimum turnover tax. They also called for a centralised insurance taxation system to achieve uniform treatment across the board and to eliminate instances of double taxation at the provincial level.

Following the meeting, an official statement was released in which Finance Minister Aurangzeb assured the CEOs that their proposals would be given careful consideration, especially those concerning taxation and policy measures essential for future growth in the industry.

Aurangzeb mentioned that the consultative process for the upcoming federal budget has been expedited this year, stating that over 90 percent of the process has already been finalised with inputs, recommendations, and proposals gathered from various stakeholders, including those in the insurance sector.

The minister reaffirmed the government’s commitment to bolstering the insurance sector, acknowledging its potential for fostering significant private sector investment.

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He noted that the government is eager to diversify lending avenues beyond the banking industry and encouraged the insurance sector to rise to the occasion to meet the increasing demand.

Discussion points included strategies for expanding the sector by focusing on innovation, improving productivity, and driving further growth. The finance minister assured the delegation of the government’s intention to collaborate closely with industry leaders and stakeholders to ensure the long-term success and sustainability of the insurance sector, which plays a crucial role in Pakistan’s economic framework.

The talks also highlighted the contributions of the insurance sector to the national economy, particularly its influence on the health system, investments in Pakistan Investment Bonds, capital markets, and opportunities for long-term investments. The delegation provided current statistics illustrating the industry’s significance, boasting assets valued at Rs2.900 trillion, along with 20,000 direct jobs and an indirect employment impact on 234,000 individuals.

The sector’s role was further underscored by its gross written premiums totalling Rs613 billion and claims paid amounting to Rs373 billion thus far.