ADB approves USD700 million loan for Pakistan insurance sector reforms

WEB DESK: The Asian Development Bank (ADB) has approved a $700 million loan for Pakistan aimed at strengthening the country’s insurance sector, expanding coverage, and improving the overall resilience of the financial system.

According to the ADB, the programme is designed to address Pakistan’s existing insurance protection gap, increase private sector participation, and enhance the economy’s ability to manage future risks.

The bank noted that Pakistan’s insurance sector currently stands at just 0.7% of GDP, highlighting the need for structural reforms. To address this, an Insurance Transformation Programme has been introduced.

Under the initiative, specialised insurance products will be developed for farmers, women, and vulnerable communities. The programme will also promote modern risk protection mechanisms, particularly against natural disasters and climate-related shocks.

ADB said the reforms will introduce satellite-based risk assessment tools, expand digital insurance services, and improve the claims processing system to make access to services more efficient and inclusive.

The programme is also expected to support long-term savings mobilisation, investment growth, and the development of bond markets and private pension products in Pakistan.

The bank added that these reforms will help shift Pakistan’s insurance industry from a traditional structure to a modern, risk-based model, improving the country’s overall economic resilience and its ability to recover from financial and environmental shocks.