The primary insurance legislation is the Insurance Ordinance, 2000.
Responsibility for the supervision of the insurance industry lies with the Insurance Division of the Securities and Exchange Commission of Pakistan (SECP). The local association is the Insurance Association of Pakistan (IAP).
Admitted / Non-admitted
The only class that may be written by overseas insurance companies is marine export cargo and all other business must only be written by companies registered to conduct business in Pakistan. Reinsurers do not have to be admitted or registered locally.
- Motor third party liability.
- Professional indemnity for insurance brokers and loss adjusters.
- Airline liability.
There are two state-owned companies in the non-life market: National Insurance Company Limited (NICL) is the exclusive direct insurer of public sector risks while Pakistan Reinsurance Company Limited (PRCL) is the market’s only professional reinsurer.
State Life Insurance Corporation of Pakistan is the only state-owned life insurer in Pakistan.
There are no tariff classes.
Premium Taxes and Charges
Local clients have to pay a federal insurance tax of 1% and with the exception of marine export card business. The federal excise tax of 17% is classified as a general sales tax.
Reinsurances placed outside Pakistan are subject to a withholding tax at a rate of 5% of the gross premium ceded.
The global economic recession, the extensive losses generated by the assassination of Benazir Bhutto at the end of December 2007 and a rising claims trend in 2008 combined to harden reinsurance terms for the Pakistan market.
There is a trend amongst larger insurers to arrange their property and marine reinsurance on a non-proportional basis. Cessions to treaties are calculated mostly on a sum insured and less on a PML basis.