The Asian Development Bank approved a $700 million ADB Pakistan loan to support insurance sector reforms and expand financial protection, the lender said.
The policy-based loan will fund the Insurance Transformation Programme, according to the ADB statement. The programme aims to expand insurance coverage and reduce protection gaps.
ADB said the reforms would deepen insurance markets for households, businesses, farmers and public finances. The lender said coverage would target extreme weather events, disasters and life-cycle risks.
Pakistan’s financial system remains heavily bank-dominated, while insurance penetration stands at only 0.7% of gross domestic product, according to ADB.
Emma Fan, ADB country director for Pakistan, said the programme would move the sector from a legacy rules-based framework to a modern, risk-based and market-oriented system.
Fan said the reforms would mobilise patient capital, expand protection for households and businesses, and support a more competitive and resilient insurance market.
The programme will support the development of inclusive, shock-responsive insurance products for farmers, women and vulnerable households, according to ADB.
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ADB said the reforms would use digital distribution systems, satellite-based risk assessment, parametric insurance solutions and risk-pooling mechanisms to improve claims settlement and access.
The loan will also support capital markets and private pension products by mobilising long-term savings for infrastructure financing, bond market development and annuity-based pension systems.
