Inclusive insurance and

risk financing in Pakistan

Snapshot and way forward 2024
 Why this
report
This report summarizes the key findings of an inclusive insurance and
disaster risk finance country diagnostic carried out by the UNDP’s
Insurance and Risk Finance Facility (IRFF) and UNDP Pakistan. The
objective of this summary report is to present a high-level overview
of the following information for Pakistan:

1 2 3 4
Recommendations
Key risks, The current The current to advance inclusive
especially state of state of insurance, disaster risk
climate risks inclusive disaster risk finance and overall
insurance finance development.

This summary is a starting point for discussion and

collaborative action planning on inclusive insurance
and disaster risk finance between UNDP and critical
stakeholders, including the insurance sector, government
agencies and other development sector actors.

IRFF goals

Impacts: Reduced vulnerability, Outcomes: Country and community

enhanced resilience of long-term resilience improved by
countries and communities development and delivery of integrated
and strengthened prospects for insurance, risk finance and investment
sustainable development. solutions, from products, tools and
services all the way leading to market
transformation.

Contact IRFF for questions:

If you wish to discuss the findings and
recommendations of this report, reach out to:

[email protected]

2
 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

Key
messages

1 Risks: Pakistan is among the world’s top ten countries most exposed to natural
disasters. Key hazards include floods, drought, earthquakes, tropical cyclones and
locust infestations.

Inclusive insurance: Inclusive insurance in Pakistan is primarily comprised of

microinsurance and micro-takaful products bundled with micro-loans and, in some
2 provinces, a free health insurance scheme. Policy reforms and new initiatives by the
Securities and Exchange Commission of Pakistan (SECP) aim to target digitalization
and innovation in the insurance sector and regulatory frameworks for digital-only
insurers and microinsurance companies. Major barriers impacting demand include
attitudes to insurance as being un-Islamic, low levels of insurance awareness and
affordability concerns.

Disaster Risk finance: The National Disaster Risk Management Fund, mandated
3 by the government, has developed the National Disaster Risk Financing Strategy
(NDRFS) which has been approved by the Government. Currently, disaster risk
financing comes from government budgets, donor assistance, government-
sponsored flagship social safety net scheme and subsidized national agriculture
disaster insurance programmes.

Key recommendations include: To support inclusive insurance development,

interventions are proposed on conducting regulatory review and impact evaluation;
4 enhancing insurance underwriting capabilities; boosting insurance awareness
and demand; developing new products; and rolling out technology and digital
innovations. To improve disaster risk financing, key interventions are recommended
on establishing compulsory catastrophe insurance for public infrastructure; tracking
contingent liabilities and enhancing financial disaster risk assessment; designing
provincial disaster risk financing strategies; and developing disaster insurance
for governments and MSMEs, as well as households and smallholder farmers, as
recommended by the National Disaster Risk Reduction Policy 2013.

3
 Pakistan’s
development
and risk profile
Key macroeconomic
and development indicators

241.5 million people lived 24% of GDP is contributed by

in Pakistan in 2023,1 making it the agriculture, including livestock and
world’s 5th most populous country,2 crops. Agriculture also employs
and 61.18% of the population lives 37.4% of people and ensures the
in rural areas.3 country’s food security.6

161 out of 191 was 39.4% of the population

the country’s rank in human
live below the poverty line, an
development.7
increase of just over 5% in one
year between 2022 and 2023,
in spite of previous notable
progress in poverty reduction.8

US$374.7 billion was Pakistan’s

gross domestic product (GDP) in 2022,4
although economic growth slowed by
0.6% in 2023 after growing by 6.1 percent
in 2022 and 5.8 percent in 2021.5 Pakistan 82 per 100 people have a
is a lower-middle-income country. mobile phone subscription,10 but
despite significant technological
advancements, digital innovations
are not being leveraged for the
16.3% of adults (aged 15+) held advancement of inclusive insurance.
an account at a regulated financial
institution in 2021, most of whom were
men.9

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 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

Geographic context:
From the coastal areas of the Arabian Sea in the south to the
mountain ranges of the Karakoram, Hindukush and Himalayas in the
north, Pakistan is characterized by diverse topography, ecosystems
and climate zones, made up of plateaus, river plains, deserts,
swamps and forests.11 The country geologically overlaps with three
colliding tectonic plates – the Indian, Eurasian and Arabian plates
– and the colliding boundaries of the Indian and Eurasian tectonic
plates cause significant seismic instabilities in the region.12

Hazard context:
Pakistan ranks 10th globally for risk exposure and vulnerability
to natural disasters, according to the 2022 World Risk Index.13
The 2021 Global Climate Risk Index ranks the country as the 8th
most affected by extreme weather events.14 Natural disasters
affect approximately 3 million people annually on average.15
The World Bank estimates an exponential increase by 2030 in
the number of people vulnerable to natural disasters in the
country, worsened by climate change and declining water
availability.16

5
 Key risks and hazards
Floods
Pakistan is one of the most flood-prone countries in South Asia, with four main flood types prevalent in the
country: riverine floods (concentrated in the Indus River Basin), flash floods, glacial lake outbursts and coastal
flooding linked with cyclone activity.
Flooding events account for 77% of all individuals affected by natural disasters since 1973. Flooding’s annual
economic impact is estimated between $1.2 billion and $1.8 billion, and potential losses from a major flood
event could exceed $15.5 billion.17
In 2022, Pakistan experienced catastrophic floods that impacted about 33 million people, displaced around
8 million and resulted in over 1,700 fatalities. The 2022 floods had a fiscal impact of approximately $30 billion.18

Drought and heatwaves

Pakistan is increasingly vulnerable to droughts marked by rainfall fluctuations and deficit and is regularly exposed
to heatwaves.19 Balochistan, Sindh and southern Punjab are particularly vulnerable to recurring droughts and
heatwaves.
Balochistan is especially vulnerable to hydrological droughts due to its arid climatic conditions. The province is
affected by drought every four in ten years. Balochistan is heavily reliant on agriculture, and from 1975 to 2010,
prolonged droughts destroyed nearly 80% of fruit orchards and caused the deaths of around 2 million animals.20
Crop cultivation has reduced by 34% due to drought, and food insecurity is very high, with 74% of households
moderately to severely food insecure and 22% severely food insecure.21
In 2022, Pakistan experienced its hottest March and April on record, with temperatures over 4°C higher than
the long-term average. The devastating 2022 floods followed on the heels of an unusually severe heatwave
and drought during which temperatures continuously remained above 45°C.22 In the same months, there was
significantly less rainfall than usual.23
These conditions result in hospitalizations and deaths, as well as livestock loss and crop failure. All these factors
contribute to a high level of malnutrition among children.24
It was estimated that over 65,000 people were hospitalized during the 2015 heatwave.25

Earthquakes
Because of the colliding tectonic plates on which it is located, Pakistan is prone to earthquakes, especially in
the Hindu Kush, Karakorum and Kohe-Suleiman mountain ranges. Weak infrastructure exacerbates these areas’
vulnerability to earthquake risk.
The 2005 earthquake was the deadliest, claiming over 75,000 lives, injuring 138,000 and displacing 3.5 million.26
It was also costly, resulting in total economic losses of around $5.2 billion, approximately 4.5% of GDP at the time.27
Smaller, frequent earthquakes also destroy peoples’ homes. Residential/housing sector losses (financial losses
incurred in the housing sector within a single year due to earthquake) attributable to earthquakes have been
estimated at $1 billion annually, potentially exceeding $18.7 billion in a 1-in-100-year scenario.28 Other estimates
place average annual losses from earthquakes at around $614 million.29

Locust invasions
Pakistan is the site of internal breeding grounds for desert locusts, traditionally found in Balochistan’s deserts
during winter and migrating to Sindh and Punjab in the summer. Changing weather patterns have disrupted the
locust’s traditional migratory routes, forcing them to remain in specific areas for breeding. As a result, Pakistan
has experienced a surge in locust outbreaks, notably in 2020, primarily affecting Sindh and Punjab. Estimates
show that a locust invasion could result in potential agricultural losses of approximately PKR 353 billion (~$1.2
billion) for rabi (winter) crops and PKR 464 billion (~$1.5 billion) for kharif (summer) crops.30

Tropical cyclones
Pakistan has a history of exposure to tropical cyclones and associated hazards, particularly in the coastal regions
of Balochistan and Sindh. These hazards include high winds and heavy rainfall, often leading to flooding. They are
expected to worsen due to changes in cyclonic activity in the Indian Ocean caused by climate change.31
In 2007, Cyclone Yemyin triggered flash floods across Balochistan and Sindh, resulting in 380 deaths, some 350,000
people displaced, 1.5 million people affected and more than 2 million livestock lost.32 It is estimated that Yemyin
caused total damages equivalent to $2.1 billion. In 2010, Cyclone Phet resulted in losses of $99 million.33

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 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

Inclusive
insurance : Status
34

Enabling environment35
Highlights from the enabling environment for
inclusive insurance in Pakistan

Insurance Acts
• The Insurance Ordinance 2000 is the primary insurance law in Pakistan, regulating all
insurance activities. SECP is aware of the limitations of the Insurance Ordinance 2000 and
has developed a draft Insurance Ordinance (Amendment) Bill 2020.36 While the legislation
has not yet been passed, the new ordinance has been highlighted as a critical milestone
Regulations

in SECP’s five-year insurance road map, as part of an aim to bring the country in line with
international regulatory standards to encourage foreign stakeholders to enter the market.
As such, the draft bill aims to capture policy reforms and new initiatives undertaken in
recent years to strengthen Pakistan’s insurance regulatory framework and enhance market
development. These reforms and initiatives emphasize digitization and innovation and
include disaster risk finance and microinsurance enabling legal provisions.37
• In addition, SECP periodically promulgates rules and formulates guidelines for the insurance
sector.38
• The Insurance Rules 2017 are the most recent rules and guidelines for the insurance
sector. Others include the Takaful Rules 2012 and Regulatory Sandbox Guidelines 2019.

Inclusive insurance related regulations

• The Microinsurance Rules 2014 established a dedicated regulatory framework for microinsurance
in Pakistan, in which microinsurance is defined as insurance products and services for low-income
persons that meet their needs for risk protection and relief against distress, misfortune or contingent
events for modest and defined benefit levels. The rules include a specialized code of conduct for
carrying out microinsurance business with low-income customers.
• However, it is reported that insurers see the microinsurance rules as too restrictive for
implementation. As a result, products are underwritten under other classes of business, rather
than offered as microinsurance.39

• SECP’s recent emphasis on digitization and innovation is driving a paradigm shift in inclusive
insurance regulation, evident in key policy reforms and new initiatives, including:
• Amendment of the Insurance Rules to allow registration of digital-only insurers and dedicated
microinsurers in an effort to lower the barriers to entry and serve vulnerable markets.40
• Facilitation of a Memorandum of Understanding (MOU)41 between IAP and the Central
Depositary Company (CDC) for the digital aggregation of insurance products through Emlaak
Financials, the country’s first digital aggregator of mutual funds, piloted in 2021.
• The proposed implementation of a risk-based capital regime is included in the Insurance
Ordinance (Amendment) Bill 2020, which, if approved, would enable insurers to align minimum
capital with risk exposure.
• SECP’s new five-year insurance road map also proposes regular consultations with various
stakeholders including insurtechs, digital intermediaries and web aggregators.

7
 Financial education initiatives
• The NFIS includes awareness raising and
capacity-building activities on Islamic finance.
• The National Institute of Banking and Finance,
in collaboration with SBP, launched the
National Financial Literacy Program for Youth
National Financial Inclusion Strategy (NFIS)
Policies / Plans

(NFLP-Y) in 2018, aimed at providing essential

• Introduced in 2015, Pakistan’s NFIS aims financial education to Pakistani youth and
to enhance financial inclusion. The NFIS school children.
includes recommendations for the further • Through the NFLP-Y, SBP launched an
development of the Crop Loan Insurance e-learning game, PomPak, designed
Scheme (CLIS), but no other insurance to enhance young people’s money
initiatives are included. management skills and financial
• By 2023, the NFIS aims to enhance usage of knowledge.
digital payments, increase the deposit base,
• SECP previously launched an initiative called
promote small and medium-sized enterprise
Juma Poonji aimed at investor education and
(SME) finance, increase agricultural finance
awareness building, but the initiative is no
and enhance the share of Islamic banking.
longer active. No known financial education
It places significant emphasis on enhancing
initiatives dedicated to inclusive insurance
financial inclusion for women, in recognition
and/or microinsurance currently exist.
of its pivotal role in societal progress.45

Securities and Exchange Commission of Ministry of Commerce (MoC)

Pakistan (SECP) • In addition to SECP, all state-owned
SECP was created in 1997 and is the primary insurance entities (SOIEs) fall under the
regulatory and supervisory body for the administrative control of the MoC. However,
insurance industry in Pakistan, as well as this has led to weak oversight and has
for capital markets, the non-banking and caused numerous regulatory challenges for
private pensions sectors. SECP.
• SOIEs include state-owned insurers State
• In recent years, SECP has undertaken
Life Insurance Corporation (SLIC), Postal
measures to promote digitalization and
Stakeholders

Life Insurance Company (PLIC), National

innovation within registered institutions,
Insurance Company Limited (NICL), Sindh
so as to increase financial inclusion.
Insurance Company Limited and Alpha
Examples include the launch of its
Insurance (a subsidiary of SLIC), as well as
flagship registration platform Leading
the national reinsurer Pakistan Reinsurance
Efficiency through Automation Prowess
Company Limited (PakRe).44
(LEAP), aimed at promoting transparency
and enabling efficient transactions for
consumers; the SECP Regulatory Sandbox
State Bank of Pakistan (SBP)
Guidelines for live tests of innovative
products; the creation of the Centralized • SBP was established in 1956 and functions
Information Sharing Solution for Life as Pakistan’s central bank, regulating the
Insurance Industry (CISSI) to assist with monetary and credit system.
policy underwriting, pricing and claims • SBP is involved in developing national
processing; and the introduction of policies and strategies that promote
Taktech (Takaful Technology)42 to extend financial inclusion, in particular the National
takaful coverage to unserved population Financial Inclusion Strategy, as well as the
segments. Banking on Equality Policy, which aims
• At the end of 2023, SECP unveiled a to improve women’s access to financial
five-year road map, Journey to an services.46
Insured Pakistan, to increase insurance
penetration in the country.43

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 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

Institute of Financial Markets Pakistan

(IFMP)
IFMP is an established training institute
established and managed by SECP. It
focuses on providing a sound knowledge
base and quality training for the
financial market, including for insurance
professionals.

Pakistan Insurance Institute (PII) Benazir Income Support Programme

(BISP)
• PII is the primary organization for insurance
training, education and knowledge- • BISP is Pakistan’s flagship anti-poverty
sharing in the country. initiative, impacting over 35.8 million lives
through a multidimensional approach
• PII offers courses for those wanting to
providing human capital development,
enter or already working in the insurance
jobs, livelihoods and safety nets.
industry48 and is planning to offer basic
online courses to enhance insurance • Its key achievements include:
awareness.49 • Helping to collect digital data
• PII has hosted conferences on door-to-door, in a first initiative of its
microinsurance50 and could in future play kind, to build a new Socioeconomic
a bigger role in inclusive insurance training Registry including information on over
and awareness raising. 34 million families in order to assess
household socioeconomic status and
poverty level.
• Cash transfers targeting women
Stakeholders

Insurance Association of Pakistan (IAP)

to promote women’s economic
• IAP, established in 1948, is a voluntary
empowerment.
body that represents the insurance
• Conducting the largest and
industry of Pakistan, with the objectives
most extensive social protection
of promoting, supporting and protecting
intervention in the history of the
the mandate of its member companies. It
country through its COVID-19
does not have any legal authority.
response, the BISP Emergency Cash
• IAP has various committees, including
programme, which delivered PKR
the Technology Committee, the
179 billion as one-time emergency
Takaful Committee and the Insurance
cash assistance to over 15 million
Development and Promotional Activities
families at risk of extreme poverty,
Committee.
representing nearly half the country’s
• Pakistan does not have a multi-
population.51
stakeholder platform for microinsurance
growth, and IAP could play a facilitation • Widespread reforms have also been
role in creating one, including by introduced by leveraging technology
involving non-insurer stakeholders such as to ensure transparent payment
distribution channels.47 SECP plans to build mechanisms through bank branches,
capacity within the IAP to enable it to branchless banking, device restrictions
play a meaningful role to this end. and many other safety protocol
• SECP’s new five-year road map also measures.
proposes regular roundtables with IAP and
microinsurance players such as insurtechs,
digital intermediaries/web aggregators
and microfinance stakeholders.

9
 Supply-side snapshot
Overall insurance coverage (traditional and inclusive):
Fast facts

42 insurers are active in the 11% of the total market

market, comprising 28 non- premium in 2022 was
life insurers, 2 general takaful accounted for by takaful,
operators, 8 life insurers, 3 family demonstrating that its
takaful operators and potential has yet to be
1 reinsurer.52 realized.54

PKR 553 billion (~$1.4 0.87% was the rate

billion) was total insurance gross of insurance penetration
premium volume in 2022, with life (premium volume as % GDP)
insurance accounting for 68% in 2022.55
of gross written premiums (PKR
375 billion) and non-life 32% (PKR PKR 4,316 million
178 billion). Total gross written in premiums went to inclusive
premiums grew by 22% from the insurance, with 16.37 million
previous year.53 policies underwritten in 2022.56

Distribution

Common channels:
• The microfinance sector is the primary channel for the distribution of
microinsurance and micro-takaful products.57

Other potential channels:58

• SECP’s efforts to promote technological innovations through digital-only
insurers, as well as its recent emphasis on Taktech and Emlaak Financials,
have the potential to enhance insurance outreach.

• The majority of microinsurance premiums written by the industry are

generated through the microfinance sector, but the sector’s full potential
for extending insurance to untapped segments of the population has yet
to be realized.

• Rural non-governmental organizations (NGOs) with a grassroots presence

in communities could play an important role in building trust and reaching
untapped segments, especially among women, with whom they mainly
engage.

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 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

Inclusive insurance: Fast facts

• Although the Microinsurance Rules were introduced in 2014,

microinsurance business remains part of the mainstream
insurance industry in Pakistan, with as yet no formal distinction
of specialized microinsurance companies or products.

• Credit life insurance is mandatorily bundled with all microcredit,

and although it falls under the definition of a microinsurance
product, it is not reported to SECP. Additionally, some
microfinance providers also bundle compulsory health
insurance with microcredit. Therefore, total microfinance
borrowers with insurance policies are estimated at 8.4 million.59

National insurance schemes:

• The Crop Loan Insurance Scheme (CLIS), • The Prime Minister’s National Health Program
launched in 2008 in Pakistan, is a federal crop- (PMNHP), also known as the Sehat Sahulat
credit insurance scheme compulsory for all Program, was launched in 2015 with the objective
farmers accessing seasonal production loans of improving poorer people’s access to good
from commercial banks and microfinance banks. quality medical health services through a health
The CLIS product has a capped premium and microinsurance scheme that includes (in-patient)
coverage for natural calamities and crop diseases packages for secondary care and priority
for wheat, rice, sugar cane, maize and cotton. It treatment. PMNHP has enrolled over 42 million
only protects against the most catastrophic risk, families to date. However, following a change in
when crop damage exceeds 50% of the average government, it has reportedly been suspended
yield.60 The Government fully subsidizes premiums or discontinued since 2023.62 In February 2024,
for loanee farmers with up to 25 acres of land (32 the newly elected government of Khyber
acres in the case of Balochistan), which takes in Pakhtunkhwa announced the continuation of this
approximately 1.1 million borrowers.61 The scheme scheme for the entire population of this province.
is not available to non-loanees, leaving around
• The Government’s Mark-up Subsidy Program
7.1 million smallholder farmers uncovered.
(G-MSP), also known as the Mera Pakistan Mera
• The Livestock Insurance Scheme for Borrowers Ghar scheme, was launched in the second
(LISB) was launched in 2013 and links livestock half of 2020 to promote affordable housing and
mortality insurance to livestock loans up to PKR 5 homeownership among low- to middle-income
million (~$16,000) used for the purchase of cows, groups. Administered by SBP, G-MSP offers
buffaloes and bulls. The Government subsidizes financing subsidies for individuals without existing
100% of the premium for smallholder farmers, homes, enabling them either to construct or
financing the purchase of up to 10 cattle. to purchase a new house. It includes a built-in
insurance component, part of which covers risk
financing. This scheme was temporarily suspended
in mid 2022, but was subsequently reshaped and
restarted to ensure better targeting. Its current
penetration levels are unclear.63

11
 Demand Microinsurance insurance uptake in Pakistan is low. Reasons include religious beliefs (that is,
Islamic strictures on conventional insurance), affordability concerns, low levels of insurance
awareness and financial literacy, mistrust, complex and lengthy customer journeys
(especially as regards claims processing), and lack of appropriate or innovative products.64

The main barriers to rapid growth are supply constraints. Non-life insurance companies,
mainly selling through agencies, have not been successful in creating demand for inclusive
insurance by developing products and services that are easily available at affordable
prices and suit the specific needs of the retail market. On the other hand, life insurers
have successfully reduced supply barriers and built demand in low-income markets. This
demonstrates that suppliers are often responsible for creating market demand, especially
in a country like Pakistan with low literacy and income levels.

Potential untapped or underserved target segments for inclusive insurance include micro-,
small and medium-sized enterprises (MSMEs), smallholder farmers’ crops and livestock,
agricultural value chain entities and low-income women in rural areas. According to a
World Bank study on women’s financial inclusion, unforeseen medical expenses, the death
or disability of a member of household and the birth of a child are among the top risks
faced by women in Pakistan (from samples in Khyber Pakhtunkhwa and Balochistan).65

Disaster risk
financing: Status
Disaster risk assessments and data systems

Fiscal Disaster Risk Assessment (FDRA), published in 2015, aimed to raise awareness on the fiscal
impacts of natural disasters and provide options for a national disaster risk financing strategy
for Pakistan. Developed with technical support from the World Bank and the Global Facility for
Disaster Reduction and Recovery (GFDRR), it was a collaborative effort involving the National
Disaster Management Authority, the Ministry of Finance (MoF), SECP and the Provincial Disaster
Management Authorities (PDMA).

• FDRA identified a significant financing challenge to dealing with the impact of natural
disasters, with flooding alone causing an annual economic impact estimated between 3%
and 4% of the federal budget.

Natural Catastrophe Modelling (NatCat Model) has been developed by the Space and Upper
Atmosphere Research Commission (SUPARCO). It is intended for use by all relevant stakeholders
working within the natural disaster management space, including the insurance and reinsurance
industry and, most importantly, the Government of Pakistan, to enable it to allocate budget
for natural disasters and assist the National Disaster Risk Management Fund (NDRMF) with
disaster risk preparedness, reduction and financing. The model will eventually help in physical
vulnerability and risk assessment on a national level against seismic and hydro-meteorological
hazards (floods, droughts, earthquakes and cyclones). It will be available on a spatial database
and web portal, also to be created under the project.66

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 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

Existing legal, Legal

institutional The National Disaster Management Act 2010 establishes

and policy a dedicated framework for federal and provincial

planning, funding and implementation related to disaster

frameworks67 risk management, including disaster risk reduction (DRR)

activities and post-disaster operations. It sets up a disaster
risk management (DRM) structure at all administrative
levels in the country and establishes the mechanisms for
disaster management funds.

Institutional

• Under the National Disaster Management Act 2010, a three-tier institutional

structure was established, in which each tier has identical roles and
responsibilities for executing disaster management operations within its
respective jurisdiction:
• The National Disaster Management Authority (NDMA) at federal level
• Provincial Disaster Management Authorities (PDMAs) at provincial and
regional levels
• District Disaster Management Authorities (DDMAs) at district levels.

• Similarly, a two-tier policymaking structure was established at the federal

and provincial levels: the National Disaster Management Commission
(NDMC) at the federal level and Provincial Disaster Management
Commissions (PDMCs) at provincial levels.
• To accumulate the funds needed for post-disaster operations, a two-tier
structure was set up: the National Disaster Management Fund at federal level
and the Provincial Disaster Management Funds (PDMFs) at provincial level.
• The National Disaster and Risk Management Fund (NDRMF)68 was established
as a separate, government-owned, not-for-profit entity in 2016 under section
42 of the Companies Act 2017 and has a corporate structure and board of
directors. Its key roles are in disaster risk reduction and disaster risk financing.
It acts as a non-banking financial intermediary for disaster risk reduction and
financing in Pakistan, managing and disbursing funds aimed at reducing
risks and vulnerabilities and facilitating early and effective response and
recovery.
• The initial funding for NDRMF comes from a $200 million loan from the
Asian Development Bank (ADB), along with grants of $3.4 million from
the Australian government and $1.5 million from the Swiss Agency for
Development and Cooperation (SDC).
• NDRMF allocates funds through matching grants, providing up to 70% of
support for various disaster risk reduction interventions. It also occasionally
partners with other entities to extend grant financing for projects focused
on disaster risk reduction and preparedness.
• NDRMF, as mandated by the Government, has led the development
of a National Disaster Risk Financing Strategy (NDRFS), which aims to
facilitate informed decision-making on the selection of an efficient mix
of ex-ante investments in DRF instruments to enhance Pakistan’s financial
resilience. The NDRFS addresses issues including sovereign disaster risk
finance and transfer; financial market development; risk assessment; and
accompanying measures.

13
 Policies

• The National Disaster Risk Reduction Policy (2013) outlines priorities and directions for risk
reduction, with an emphasis on prevention, mitigation and preparedness. It covers both
natural and human-made hazards. Among its preparedness actions, the policy mandates
the development of a sovereign disaster risk financing strategy with a risk layering approach
comprising a mix of insurance and non-insurance instruments to finance various layers of risk
in order to enhance the Government’s financial response capacity. The policy acknowledges
the need to develop sovereign and private catastrophe insurance market with the support of
the insurance regulator, with particular focus on homeowners, SMEs, the microfinance sector,
smallholder farmers and vulnerable communities.69
• National Climate Change Policy (updated 2021) aims to promote climate adaptation and
mitigation. Its objectives include: to foster the development of appropriate economic
incentives to encourage public and private sector investment in adaptation and mitigation
measures; to enhance the awareness, skill and institutional capacity of relevant stakeholders;
to focus on pro-poor gender-sensitive adaptation; to minimize the risks arising from the
increase in frequency and intensity of extreme weather events; and to develop climate-
resilient agriculture and food systems for all agro-ecological zones.70
• The National Disaster Management Plan (NDMP) (2012–2022) aims to improve the country’s
ability to prepare for and respond to disasters by defining the measures needed for disaster
management and by identifying the roles and responsibilities of stakeholders.71

Disaster risk finance

mechanisms and
instruments72
The costs of most large natural disasters are retained on government
books and only negligible disaster risk insurance or non-insurance
instrument has yet been set up at sovereign level by the federal and
provincial governments. As such, the Government relies primarily
on supplementary and contingent budgeting and reallocation of
resources from development projects to meet its post-disaster needs.
The protection gap in the country, exacerbated by huge funding gaps,
has historically led to severe fiscal challenges.

14
 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

Existing instruments:

As of now, the Government does not make specific allocations for the funds
required to conduct post-disaster operations. According to NDRMF data,
government spending on disaster-related emergency relief across various
agencies averaged PKR 3 billion ($9.8 million) between 2010 and 2018.

• Contingent budget lines are used at district and provincial levels for
emergency response.
• The federal budget is used where district and provincial budgets are
insufficient.
• Budgetary adjustments are used for additional expenses, adjusting the
next year’s budget via supplementary grants.

Donor assistance is provided by international agencies and foreign

governments for humanitarian relief.

Insurance for public assets. NICL has the exclusive legal mandate to insure
all public assets. However, it is understood that most public assets are insured
only for the construction phase.73

Natural disaster insurance has been underwritten by the insurance industry in

Pakistan since 1947, under the class of Fire and Property Insurance. All major
natural disasters are included in these policies through an Atmospheric
Disturbance clause. This insurance for the commercial sector, including
textile, manufacturing, oil and gas, banks, multinational companies and
power plants, has historically been the biggest revenue generator for the
non-life sector, with a share of between 25% and 28% of the entire total of
non-life gross written premiums.74 However, the insurance sector has been
historically afflicted with severe demand and supply constraints for writing
personal lines of business, and as a result, the huge retail market remains
largely untapped.

As of May 2023, Start Network’s second pool of Start Ready funds are live for a 12-month period in Pakistan
for various humanitarian agencies to protect against heatwaves, riverine/fluvial floods and drought. The
funds have been triggered four times so far by heatwaves for a total amount of GBP 240,555 (~$300,000).75
Additionally, READY Pakistan, launched in 2021, collaborates with national authorities and international
organizations to model risks, develop plans and pre-position funds against hazards in the country.

15
 Way forward
for inclusive
insurance and
risk financing
The following recommendations support the development of inclusive
insurance and disaster risk financing in Pakistan.

1 Recommendations for
the development of inclusive insurance

Regulatory bottlenecks prevent the development of inclusive insurance.

1.1
Review and update insurance regulations related to microinsurance and create
enabling provisions for agriculture insurance in the Insurance Ordinance (Amendment)
Bill 2020.
• The Insurance Ordinance 2000 should be updated to bring it in line with international
Regulatory Standards.
• A comprehensive review of existing and draft microinsurance regulations should be
conducted, along with an assessment of the specific challenges which are deterring
insurance providers from registering and delivering microinsurance products.
• New provisions should be recommended in consensus with SECP and the insurance
sector to address issues related to capital requirements for dedicated microinsurance
companies.
• The regulatory environment related to agricultural and climate risk insurance should
be reviewed, and the need should be evaluated for specialized regulations or for
incorporation of new clauses into the existing regulations.
• Technical assistance should be provided to develop regulations for conventional and
takaful agricultural insurance, including index-based insurance and parametric products.
• SECP should be supported with capacity-building and knowledge-sharing on inclusive
insurance from other countries, particularly on index-based insurance.

16
 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

1.2

There are limited need-based retail offerings suitable to meet the needs of the low-
income market. Insurers lack interest in developing innovative inclusive insurance
products.
Develop new inclusive insurance products.
• Available inclusive insurance products should be reviewed, including but not limited
to agriculture products, and the experiences and needs of underserved target groups
(smallholder livestock and crop producers, rural women and MSMEs) should be
assessed. Based on this, government priorities should be identified.
• Technical assistance should be provided to develop or improve products and pilot roll-
out should be supported.

Technology and digital innovations are poised to be scaled up for inclusive insurance but
1.3
are underused.
Roll out technology and digital innovations across the whole inclusive insurance value chain.
• Current digital and technology options and those with potential for use in the inclusive insurance
sector should be assessed, in order to support insurer efficiency and customer journey.
• Partnerships with insurers should be developed to digitalize key processes on the back- and front-
end, e.g., data assessment, automation of claims processing and integration with mobile payment
channels.
• The insurance and reinsurance sectors should be supported to use the NatCat Model under
development and to ensure its efficiency and accessibility for sector stakeholders.

The local insurance market has insufficient underwriting skills, especially in relation to
1.4
agricultural insurance and climate risk insurance.
Enhance insurance underwriting skills.
• Investments should be made in training and development programmes to improve underwriting
skills within the local insurance market.
• Collaboration should be fostered with international experts and organizations to share international
best practices.
• Specialized capacity-building on inclusive insurance and climate risk insurance should be
supported, building on existing platforms such as those of IAP, PII and IFMP.

Awareness of and demand for insurance is low.

1.5
Boost insurance awareness and demand.
• Joint awareness campaigns and advocacy strategies should be developed and implemented in
public-private partnerships to increase insurance penetration, particularly through targeting the
end-clients of inclusive insurance.
• The public should be educated about the benefits of insurance and the ways in which it can
mitigate financial risks, using various methods including digital and social media platforms for
effective communication.
• Research and development should be conducted to support education and awareness raising on
inclusive insurance in line with Islamic finance principles.

17
 2
2.1
Recommendations for
the development of disaster risk financing

Compulsory catastrophe insurance coverage for critical life line public infrastructure
does not exist.

Implement compulsory catastrophe insurance for public infrastructure in collaboration

with NICL.
• A comprehensive feasibility study should be conducted to assess the implementation of
compulsory catastrophe insurance for critical life line public infrastructure, building upon
the work of NICL, which is in the process of developing a national registry of public assets.
• Options, including financing opportunities, should be explored for including this
component in all policies covering infrastructure and public assets.
• Smooth integration should be ensured in collaboration with NICL and regulatory
authorities.

The methodology for development of Fiscal Risk Statements and risk

2.2
quantification should be standardized.

Establish a contingent liabilities database.

• The Fiscal Risk Statements (FRS) currently being developed at the federal
level and in Khyber Pakhtunkhwa and Punjab provinces for the identification,
quantification, analysis and mitigation of fiscal risks, including climate and
natural disasters, should be replicated in all provinces/regions. This will enable
quantification of the Government’s total contingent liabilities as a consequence
of natural disasters
• The database should be made accessible and usable for relevant stakeholders.

The country has limited capacity for financial disaster risk assessment.
2.3
Enhance financial disaster risk assessment.
• Data inputs into financial disaster risk assessment tools should be strengthened,
potentially leveraging new initiatives such as the NatCat Model.
• Additional tools and models should be developed to facilitate a better
understanding of the budgetary impacts of natural hazards and disasters.
• The financial response capacity of relevant entities and organizations should be
assessed.

18
 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

Region-specific DRF strategies should be developed to meet the diverse

2.4
needs of all provinces and regions.
Design customized provincial DRF strategies.
• All provinces and regions should be supported by the Federal Government to
develop disaster financing strategies suited to local needs. These strategies should
be aligned with the National DRF Strategy.
• The strategies’ implementation plans should include cost estimates and a funding
gap analysis should be developed.
• The strategies should be tailored to address region-specific needs and risks.

2.5

NDMF and PDMAs have limited reserves.

Strengthen financial capacity for post-disaster operations.

• An institutionalized approach towards building adequate reserves within the
NDMF and PDMFs should be developed and implemented.
• Annual budgetary allocations should be made to build up reserves in
these funds and these allocations should be made non-lapsable to enable
accumulation of sufficient funds over the years.

2.6

Natural disaster insurance coverage is inadequate.

Develop disaster insurance.

• Options for sovereign risk insurance should be explored to safeguard government finances at the
federal and provincial level in the event of disasters.
• Offerings such as catastrophe insurance for homeowners and business interruption insurance for
small businesses (MSMEs) should be considered, and agricultural insurance options for smallholder
farmers should be designed to meet their specific needs.
• Integrating insurance within social safety nets should be explored, to gradually transfer liability on
government books to the reinsurance markets.
• A monitoring framework should be established for private and public sector pilot schemes related
to disaster insurance.

19
 Endnotes
1 Pakistan, Pakistan Bureau of Statistics, “Announcement of Results of 7th Population and Housing
Census-2023 ‘The Digital Census’”, August 2023. Available at https://www.pbs.gov.pk/sites/default/files/
population/2023/Press%20Release.pdf.
2 World Bank, “Population – total”, DataBank. Available at https://data.worldbank.org/indicator/SP.POP.
TOTL?most_recent_value_desc=true.
3 Pakistan, Pakistan Bureau of Statistics, “Announcement of Results of 7th Population and Housing
Census-2023 ‘The Digital Census.’”
4 World Bank, “GDP (current US$) – Pakistan”, DataBank. Available at https://data.worldbank.org/
indicator/NY.GDP.MKTP.CD?locations=PK.
5 World Bank, “GDP growth (annual %) – Pakistan”, DataBank. Available at https://data.worldbank.org/
indicator/NY.GDP.MKTP.KD.ZG?locations=PK.
6 Pakistan, Government of Pakistan, Finance Division, Pakistan Economic Survey 2022-23 (Islamabad, 2023).
Available at https://www.finance.gov.pk/survey_2023.html.
7 UNDP, “Human Development Index, Pakistan”, 13 March 2024. Available at https://hdr.undp.org/data-
center/specific-country-data#/countries/PAK.
8 World Bank, “Pakistan Development Update: Restoring Fiscal Sustainability” (Washington, D.C., 2023).
Available at https://thedocs.worldbank.org/en/doc/cfd9113f24c548efdc86dba482a5e2cf-0310062023/
original/Pakistan-Development-Update-October-2023.pdf.
9 World Bank, The Global Findex Database: Financial Inclusion, Digital Payments, and Resilience in the
Age of COVID-19 (Washington D.C., 2021). Available at https://www.worldbank.org/en/publication/
globalfindex/Report.
10 World Bank, “Mobile cellular subscriptions (per 100 people) – Pakistan”, DataBank. Available at https://
data.worldbank.org/indicator/IT.CEL.SETS.P2?locations=PK.
11 World Bank and Asian Development Bank, “Climate Risk Country Profile: Pakistan” (Washington, D.C.,
and Manila, 2021). Available at https://climateknowledgeportal.worldbank.org/sites/default/files/2021-
05/15078-WB_Pakistan%20Country%20Profile-WEB.pdf.
12 S.U. Khan, M.I. Qureshi, I.A. Rana and A. Maqsoom, “An empirical relationship between seismic risk
perception and physical vulnerability: A case study of Malakand, Pakistan”, International Journal of
Disaster Risk Reduction, vol. 4 (December 2019). Available at https://www.sciencedirect.com/science/
article/abs/pii/S2212420919309252.
13 Bündnis Entwicklung Hilft and IFHV, WorldRiskReport 2022 (Berlin, 2022). Available at https://
weltrisikobericht.de/wp-content/uploads/2022/09/WorldRiskReport-2022_Online.pdf.
14 CFE-DM, Disaster Management Reference Handbook: Pakistan (Joint Base Pearl Harbor–Hickam, Hawaii,
2021). Available at https://reliefweb.int/report/pakistan/disaster-management-reference-handbook-
pakistan-june-2021.
15 World Bank, Fiscal Disaster Risk Assessment. Options for Consideration: Pakistan (Washington, D.C., 2015).
Available at https://openknowledge.worldbank.org/server/api/core/bitstreams/32b595aa-67bd-5c73-
95de-4a0a1919b000/content.
16 World Bank, “Options to Strengthen Disaster Risk Financing in Pakistan” (Washington, D.C., 2020). Available
at https://documents1.worldbank.org/curated/en/858541586180590633/pdf/Options-to-Strengthen-
Disaster-Risk-Financing-in-Pakistan.pdf.
17 World Bank, Fiscal Disaster Risk Assessment. Options for Consideration: Pakistan.
18 See also Pakistan, Ministry of Planning Development & Special Initiatives, Pakistan Floods 2022: Post-
Disaster Needs Assessment (Islamabad, 2022). Available at https://www.ilo.org/sites/default/files/
wcmsp5/groups/public/@ed_emp/documents/publication/wcms_862500.pdf.
19 According to the FAO’s 1989 guide for field technicians, the arid zone is characterized by pastoralism, no
farming except with irrigation and high rainfall variability, with annual rainfall ranging between 100mm
and 300mm. The semi-arid zone, meanwhile, can more or less sustain levels of production in (rain-fed)
agriculture, with annual rainfall varying between 300–600mm and 700–800mm in summer, and between
200–250mm and 450–500mm in the winter. Food and Agriculture Organization, Arid zone forestry: A guide
for field technicians (Rome, 1989). Available at https://www.fao.org/4/t0122e/t0122e00.htm.

20
 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

20 F. Naz, G.H. Dars, K. Ansari, S. Jamro and N. Krakauer, “Drought Trends in Balochistan”, Water, vol. 12., No.
2 (February 2020). Available at https://www.mdpi.com/2073-4441/12/2/470.
21 Natural Disaster Consortium (IOM, FAO, UNICEF, WFP, WHO, HANDS and ACTED, with the technical support
of WFP and WHO), “Multi-sector needs assessment”. Unpublished, 2018.
22 Islamic Relief, “Towards a Resilient Pakistan. Moving from Rhetoric to Reality” (Birmingham, 2023).
Available at https://www.islamic-relief.org.uk/wp-content/uploads/2023/08/Towards-a-Resilient-Pakistan-
Islamic-Relief.pdf.
23 Anadolu Agency, “Rising temperatures trigger water, food insecurity in Pakistan, India”, Dawn, 19 May
2022. Available at https://www.dawn.com/news/1690460.
24 Pakistan, Pakistan National Disaster Management Authority and UN Country Team Pakistan, “Pakistan:
Drought Response Plan (Jan - Dec 2019)” (Islamabad, 2019). Available at https://reliefweb.int/report/
pakistan/pakistan-drought-response-plan-jan-dec-2019.
25 World Bank and Asian Development Bank, “Climate Risk Country Profile – Pakistan”.
26 CFE-DM, Disaster Management Reference Handbook: Pakistan.
27 Asian Development Bank and World Bank, Pakistan 2005 Earthquake Preliminary Damage and
Needs Assessment (Islamabad, 2005). Available at https://documents1.worldbank.org/curated/
en/710481468284380489/pdf/34407.pdf.
28 World Bank, Fiscal Disaster Risk Assessment. Options for Consideration: Pakistan.
29 Central Asia Regional Economic Cooperation and Asian Development Bank, Narrowing the Disaster
Risk Protection Gap in Central Asia (Manila, 2022). Available at https://www.adb.org/sites/default/files/
publication/839971/disaster-risk-protection-gap-central-asia.pdf.
30 M. Dowlatchahi, M. Ahmed and K. Cressman, “Desert Locust Situation in Pakistan”, FAO in Pakistan, 2020.
Available at https://www.fao.org/pakistan/resources/in-depth/desert-locust-situation-in-pakistan/en/.
31 CFE-DM, Disaster Management Reference Handbook: Pakistan.
32 IRIN, “Pakistan: Top 10 natural disasters since 1935”, TNH press release, 10 August 2010. Available at
https://reliefweb.int/report/pakistan/pakistan-top-10-natural-disasters-1935.
33 Loss and damage US$ amounts based on equivalent cost in 2020. History of disasters in Pakistan, 1980-
2022 in CRED, EM-DAT: The International Disaster Database. Available at https://www.emdat.be/.
34 Inclusive insurance is a broader term denoting all insurance products aimed at the excluded or
underserved market, rather than solely microinsurance or those products specifically aimed at the poor
or low-income market. For this definition, see International Association of Insurance Supervisors, “Issues
Paper on Conduct of Business in Inclusive Insurance”, IAIS Issues Papers (Basel, 2015).
35 The enabling environment refers to the regulations, public policies, stakeholders and other infrastructure
that support inclusive insurance growth.
36 Pakistan, SECP, “Draft Insurance Ordinance (Amendment) Bill 2020” (Islamabad, 2020). Available at
https://www.secp.gov.pk/document/draft-insurance-ordinance-amendment-bill-2020/.
37 Unless otherwise indicated, details regarding regulatory reforms and initiatives comes from Pakistan, SECP,
2022 Annual Report (Islamabad, 2022). Available at secp.gov.pk/document/annual-report-2022/?wpdm
dl=46161&refresh=64f059afcd5331693473199.
38 The SECP Insurance Rules 2017 are supplemented by subsequent draft amendments available at
Pakistan, SECP, “Draft Laws”. Available at https://www.secp.gov.pk/laws/draft-for-discussion/rules/.
39 For additional information regarding Pakistan’s microinsurance regulatory environment, see Pakistan
Microfinance Network, “Microinsurance: Regulatory & Supply Landscape in Pakistan”.
40 SECP Insurance Rules amendment to allow for “digital-only” insurers. Pakistan, S.R.O. 435 (I)/2023, 28
March 2023. Available at https://www.secp.gov.pk/document/sro-435-2023-dated-march-28-2023-for-
amendments-regarding-digital-insurer-in-insurance-rules-2017-3. See also Pakistan, SECP, “SECP issues draft
regulatory framework for digital-only insurers and microinsurers”, press release, 16 June 2021. Available
at https://www.secp.gov.pk/wp-content/uploads/2021/06/Press-Release-June-16-SECP-issues-the-draft-
regulatory-framework-for-digital-only-insurers-2.pdf.
41 CDC Pakistan, “Under SECP’s regulatory impetus, IAP and CDC-ITMinds Limited sign MoU for Digital
Aggregation of Insurance Products”, press release, 3 December 2021. Available at https://cdcpakistan.
com/wp-content/uploads/2021/12/PR-IAPand-CDC-ITMinds-Limited-sign-MoU-for-Digital-Aggregation-F-
Versi....pdf.
42 K.S. Sakshi, “Pakistan: SECP to unveil Takaful Technology in 2022”, The Global Economics, 25 May 2022.
Available at https://www.theglobaleconomics.com/2022/05/25/secp-and-taktech/.

21
 43 Pakistan, SECP, “SECP’s ‘International InsureImpact Conference 2023’ concludes”, press release, 14
December 2023. Available at https://www.secp.gov.pk/wp-content/uploads/2023/12/Press-Release-Dec-
14-SECPs-International-InsureImpact-Conference-2023-concludes.pdf.
44 Pakistan, Government of Pakistan, Finance Division, Federal Footprint. State Owned Enterprises.
Consolidated Report FY 2020-22 (Islamabad, 2023). Available at https://www.finance.gov.pk/
publications/Federal_Footprint_SOEs_Consolidated_Report_FY2020_22.pdf.
45 World Bank, State of Financial Inclusion of Women in Pakistan (Washington, D.C., 2018). Available
at https://openknowledge.worldbank.org/server/api/core/bitstreams/10e516e0-0a1f-5134-970e-
76fb79747289/content.
46 For more information on SBP’s Banking on Equity Policy, see Pakistan, SBP, “What is Banking on Equity
Policy?”. Available at https://www.sbp.org.pk/boe/index.html.
47 Pakistan Microfinance Network, “Microinsurance: Regulatory & Supply Landscape in Pakistan”
(Islamabad, 2018). Available at https://www.pmn.org.pk/wp-content/uploads/2020/04/Micro-Insurance-
Regulatory-Supply-Landscape-in-Pakistan.pdf.
48 PII, “Agents Foundation Course”. Available at https://pii.com.pk/e-learning-2/.
49 Additional information regarding PII sourced from the Chartered Insurance Institute, “Pakistan
Insurance Institute: Raising the profile of Pakistan’s insurance sector”, Best Practice Series: Committed to
Professionalization (London, 2018). Available at https://www.ciigroup.org/media/9224099/best-practice-
series-pakistan-insurance-institute.pdf.
50 For additional information on past conferences hosted by PII, see PII, “International Insurance
Conference”. Available at https://pii.com.pk/international-insurance-conference/.
51 World Bank, “Responsive Social Protection Program and Systems to Serve Pakistan’s Poorest People”,
15 December 2020. Available at https://www.worldbank.org/en/results/2020/12/09/responsive-social-
protection-program-and-systems-to-serve-pakistans-poorest-people.
52 Pakistan, SECP, “Unlocking the Potential of Micro and Inclusive Insurance in Pakistan” (Islamabad, 2024).
Available at https://www.secp.gov.pk/document/unlocking-the-potential-of-micro-inclusive-insurance-in-
pakistan/?wpdmdl=51279.
53 Pakistan, SECP, “Insurance Industry Statistics 2022” (Islamabad, 2023). Available at https://www.secp.gov.
pk/document/insurance-industry-statistics-2022/?wpdmdl=49286&refresh=651ab025055921696247845.
54 Ibid.
55 Ibid.
56 Pakistan, SECP, “Unlocking the Potential of Micro and Inclusive Insurance in Pakistan”.
57 Microinsurance Network, “Landscape 2020 country profile: Pakistan”. Available at https://min-media.
s3.eu-west-1.amazonaws.com/Pakistan_EN_4dac539881.pdf. See also Business Wire, “Pakistan Inclusive
Insurance Industry Report 2022: A Fertile Ground for Developing Insurance for Emerging Consumers -
ResearchAndMarkets.com”, EIN Presswire, 29 September 2022. Available at https://www.einnews.com/
pr_news/593380639/pakistan-inclusive-insurance-industry-report-2022-a-fertile-ground-for-developing-
insurance-for-emerging-consumers-researchandmarkets-com.
58 Unless otherwise indicated, details regarding regulatory reforms and initiatives sourced from World Bank,
State of Financial Inclusion of Women in Pakistan.
59 Pakistan Microfinance Network, “MicroWatch: Issue 67: Q1 (Jan-Mar) 2023” (Islamabad, 2023). Available
at https://pmn.org.pk/wp-content/uploads/2023/05/Microwatch-Issue-67.pdf.
60 World Bank, A Feasibility Study. Assessing the Potential for Large-Scale Agricultural Crop and Livestock
Insurance in Punjab Province, Pakistan (Washington, D.C., 2018). Available at https://documents1.
worldbank.org/curated/en/906921547616572396/pdf/133553-WP-P162446-PUBLIC-Punjab-Crop-Insurance-
Web.pdf.
61 The State Bank of Pakistan defined smallholder farmers as those with up to 12.5 acres in Punjab and
Khyber Pakhtunkhwa, 32 acres in Balochistan and 16 acres in Sindh. Medium farmers are those owning
12.5–25 acres. For additional information regarding CLIS, see Pakistan, SBP, “Incentive schemes for
agriculture”. Available at https://www.sbp.org.pk/Incen-others/Agri-1.asp.
62 R. Khan, “Sehat Tahafuz Programme ceases operations”, The Express Tribune, 24 March 2024. Available at
https://tribune.com.pk/story/2460343/sehat-tahafuz-programme-ceases-operations.

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 Inclusive insurance and risk financing in Pakistan: Snapshot and way forward 2024

63 For additional information regarding G-MSP, see Nexthome.pk, “Mera Pakistan Mera Ghar: Government’s
Markup Subsidy Program FAQs”. Available at https://nexthome.pk/2022/02/20/mera-pakistan-mera-ghar-
markup-subsidy-program.
64 According to research conducted for the full UNDP IRFF inclusive insurance and disaster risk finance
country diagnostic on Pakistan (unpublished).
65 World Bank, State of Financial Inclusion of Women in Pakistan.
66 United Nations Office for Outer Space Affairs (UN-SPIDER), “SUPARCO: National Workshop on Natural
Catastrophe Modeling (NatCat Model)”, 20 March 2023. Available at https://www.un-spider.org/news-
and-events/news/suparco-national-workshop-natural-catastrophe-modeling-natcat-model; Pakistan,
SUPARCO, “Disaster Management”. Available at https://suparco.gov.pk/products-services/disaster-
monitoring-and-mitigation/.
67 Unless otherwise indicated, details on existing legal, institutional and policy frameworks in Pakistan
sourced from World Bank, Fiscal Disaster Risk Assessment. Options for Consideration: Pakistan.
68 Key Informant Interviews and focus group discussion with NDRMF, 30–31 August 2021.
69 Pakistan, Ministry of Climate Change, National Disaster Management Authority, “National Disaster Risk
Reduction Policy” (Islamabad, 2013). Available at https://knowledge.unv.org/sites/default/files/2022-05/
National%20DRR%20policy%20Pakistan.pdf.
70 Pakistan, Ministry of Climate Change, National Climate Change Policy, Updated October 2021
(Islamabad, 2021). Available at https://mocc.gov.pk/SiteImage/Policy/NCCP%20Report.pdf.
71 Pakistan, Ministry of Climate Change, National Disaster Management Authority, “National Disaster
Management Plan” (Islamabad, 2012). Available at http://www.ndma.gov.pk/storage/plans/
October2020/eUvDKZR0Qa0f2eA966um.pdf.
72 Unless otherwise indicated, information on disaster risk finance mechanisms and instruments in Pakistan
comes from World Bank, Fiscal Disaster Risk Assessment. Options for Consideration: Pakistan.
73 Asian Development Bank, The Enabling Environment for Disaster Risk Financing in Pakistan: Country
Diagnostics Assessment (Manila, 2019). Available at https://www.adb.org/publications/pakistan-
environment-disaster-risk-financing.
74 Key Informant Interviews and focus group discussion with SECP, 12–13 August 2021.
75 Start Network, “Start Ready Risk Pool 2 (2023-24)”. Available at https://startnetwork.org/funds/start-ready/
Start-Ready-Risk-Pool-2.

23
 Acknowledgements
Author
MicroInsurance Centre at Milliman: Emily Coleman (independent agricultural insurance
consultant) and Jemma Maclear, and review by Michael J. McCord, based on the full diagnostic
report written by Asif Jah, with a section on Balochistan contributed by Nasreen Rashid.

Coordination and review

Sana Ehsan, National Project Coordinator, Pakistan Insurance and Risk Financing Project,
Resilience, Environment and Climate Change Unit (UNDP Pakistan), and Nasreen Rashid (UNDP
consultant)

Editing and peer review by UNDP IRFF

Diana Almoro, Lauren Carter and Ceandra Faria

Copy editor
Justine Doody

Graphic design
Nattawarath Hengviriyapanich

Disclaimer
The views and opinions expressed in this report are those of the authors and do not necessarily
reflect the official policy or position of Milliman. Examples or suggestions of potential interventions
within this paper are only examples, and implementation would require further evaluation. In
performing the data review and initial analysis, we relied on UNDP’s full country diagnostic reports,
as well as various sources of publicly available information. If the underlying data, information, or
assumptions are inaccurate or incomplete, the results of our analysis may likewise be inaccurate
or incomplete.

The views expressed in this publication are those of the author(s) and do not necessarily represent
those of the United Nations, including UNDP, or the UN Member States.

24
United Nations Development Programme (UNDP)
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UNDP Insurance & Risk Finance Facility

The Insurance and Risk Finance Facility (IRFF) is part of UNDP’s Sustainable Finance Hub (SFH) and
it is a flagship initiative dedicated to insurance and risk finance. The IRFF manages UNDP’s global
representation in the insurance space. It is a one-stop shop for innovative solutions for UNDP
Country Offices, programme countries and partners. This includes issues related to insurance and
risk finance, networking, partnership development, policy and guidelines, technical assistance,
project implementation, capacity-building and financing opportunities. More information
available at irff.undp.org

UNDP Sustainable Finance Hub

SDG financing is one of the four elements of UNDP’s SDG integrator role, and it is a cross-cutting
enabler for the success of all UNDP’s thematic areas of work. UNDP, having a long track record
of working in public finance and private sector development, through the Sustainable Finance
Hub, in collaboration with partners, supports governments, the private sector, civil society and
philanthropy to mobilize and align public and private flows of finance with the SDGs and national
priorities across different development contexts, including fragile and conflict-affected countries
and Small Island Developing States.

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