Supervision and Control

Principal Legislation

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.

Compulsory Classes

  • Motor third party liability.
  • Professional indemnity for insurance brokers and loss adjusters.
  • Airline liability.

State Involvement

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.

Tariff Classes

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.

Policy Language


Non-Life (P&C) Insurance Market

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.

Reinsurance Market
The public sector Pakistan Reinsurance Company Limited (PRCL) is the market’s only professional reinsurance company. PRCL was established originally as the Pakistan Insurance Corporation (PIC) but was reconstituted as Pakistan Reinsurance Company Limited (PRCL) in 2000 with a view to the company being run on wholly commercial lines.
Distribution Channel
The Insurance Ordinance, 2000 permits the establishment of insurance brokers in the market. The agency network dominates the intermediary market. Most agents work as tied captive agents but some work for several companies.
Natural Hazards
Although Pakistan has suffered some catastrophic earthquakes, it is regarded as a medium-risk area. Exposure to windstorm is not high, except in the northern part of the country. Flood is perhaps the greatest natural hazard in Pakistan but, in most cases, losses resulting from flood are uninsured.