By Farooq Awan

Pakistan’s insurance sector recorded a 19.4% increase in assets during 2025, supported by growth in both life and non-life premium revenues, according to the Financial Stability Review 2025 released by the State Bank of Pakistan (SBP).

The report indicates that the expansion reflects improving economic conditions and rising demand for insurance products across different segments. The growth was primarily driven by the life insurance segment, where premium revenues increased by 13.2%, supported by higher uptake of individual policies and single-premium products.

In the non-life segment, premiums increased by 8.8% during the period under review, primarily driven by rising economic activity and a recovery in sectors such as the automotive industry. Higher vehicle sales boosted demand for motor insurance, which remains a central pillar of the non-life insurance market.

The SBP noted that the insurance sector’s growth in 2025 followed a similar upward trend observed in recent years, although the pace of expansion moderated slightly compared to the previous period. The continued increase in assets reflects the sector’s gradual development and its growing role within Pakistan’s financial system.

The report highlights that improved macroeconomic stability, including lower inflation and better financial conditions, supported the growth of the insurance sector. As economic uncertainty declined, both individuals and businesses showed greater willingness to invest in insurance products for risk management and financial planning.

The life insurance segment benefited from rising household incomes and improved consumer confidence, which encouraged long-term savings through insurance policies. At the same time, the non-life segment was supported by increased commercial activity and asset ownership, leading to higher demand for coverage in areas such as motor, property, and business insurance.

Despite the positive growth, the insurance sector continues to represent a relatively small share of the overall financial system. The report suggests that there remains significant potential for further expansion, particularly through increased awareness, product innovation, and improved distribution channels.

The SBP emphasized the importance of strengthening regulatory oversight and improving transparency in the insurance market to support sustainable growth. Efforts to enhance governance standards and risk management practices are expected to bolster sector stability and reinforce investor confidence.

The report also notes that the development of the insurance sector is crucial for promoting financial inclusion and mitigating risk, particularly in a country exposed to various economic and environmental risks. Expanding insurance coverage can help reduce vulnerability and improve resilience among households and businesses.

Continued growth in the insurance sector will depend on sustained economic stability, policy support, and efforts to broaden access to insurance products across different segments of the population.

Credit: INP-WealthPk