Islamabad, Sep 24: The Competition Commission of Pakistan (CCP) has urged significant amendments to the Insurance Ordinance, 2000, to enable private companies to compete with the National Insurance Company Ltd. (NICL) in the public property insurance market.
This change aims to create a more equitable market environment, potentially leading to reduced costs for the public sector.
In its recommendations to the government, the CCP proposed transitioning the Pakistani insurance market to an Insurance Guarantee Scheme (IGS), which is successfully operational in several other countries. This shift is expected to alleviate the government’s fiscal burden while promoting efficiency and innovation within the insurance sector.
One of the CCP’s primary concerns is the preferential treatment given to state-owned enterprises (SOEs), which distorts competition. NICL currently monopolizes public sector asset insurance, while the Pakistan Reinsurance Company Ltd. (PRCL) benefits from SRO 771 (1)/2007, granting it exclusive rights to at least 35% of reinsurance businesses.
Additionally, the State Life Insurance Corporation (SLIC) enjoys federal government guarantees, creating further advantages over private insurers.
These regulatory barriers hinder market access for private companies and stifle industry growth. The Insurance Ordinance, 2000, restricts private competition by granting NICL exclusive rights to insure public property. Restrictions on foreign reinsurance procurement further exacerbate operational inefficiencies and costs.
Key recommendations from the CCP include:
- Amending SRO 771 (1)/2007 to open the reinsurance market to private firms.
- Revising Rule 18 of the Insurance Rules, 2017, to allow insurers to choose domestic or foreign reinsurers freely.
- Removing federal government guarantees on SLIC policies to foster competition.
- Establishing a single ombudsman for all insurance disputes to streamline complaint resolution.
- Rationalizing tax policies to address double taxation on insurance and reinsurance premiums.
These measures are aimed at fostering a competitive insurance market in Pakistan, enhancing efficiency, and promoting equitable access for all stakeholders.
