The federal government has introduced the Insurance Bill 2026 in the National Assembly, proposing wide-ranging reforms aimed at modernizing Pakistan’s insurance sector, promoting digital services, and allowing foreign insurers to enter the local market.
Prepared by the Securities and Exchange Commission of Pakistan, the proposed legislation seeks to replace the Insurance Ordinance 2000, which has regulated the sector for the past 25 years.
The bill proposes a more digital insurance framework through online customer onboarding, technology-driven insurance products, simplified regulatory procedures, and faster claims processing.
One of the key features of the proposed law is market liberalization, which would allow foreign insurers and reinsurers to operate in Pakistan through branch structures. The move is expected to increase competition and potentially attract fresh foreign investment into the insurance industry.
The legislation also includes provisions for perpetual licensing in place of periodic renewals, formal recognition of insurtech products, more flexible structures for intermediaries, and greater private sector participation in public property insurance.
It further introduces stronger consumer protection measures, including stricter timelines for claims handling, safeguards against mis-selling, more transparent dispute resolution mechanisms, and stronger solvency oversight through a risk-based capital framework.
Pakistan’s insurance sector has long remained underdeveloped compared to regional markets, with low penetration, limited product innovation, and weak public uptake of insurance services.
Industry estimates suggest insurance penetration in Pakistan remains below 1 percent of GDP, significantly lower than many comparable regional economies despite the country’s large population and expanding financial services market.
In recent years, the SECP has stepped up efforts to modernize the broader financial system through digital finance reforms, fintech regulation, digital licensing frameworks, and policy work around emerging technologies.
SECP Chairman Dr. Kabir Ahmed Sidhu said the proposed law is intended to improve insurance penetration by enabling more affordable and digitally accessible insurance products for a wider segment of the population.
