Insurance For All: Pakistan's Digital Path To Financial Security

Forbes

28-03-2025

Murtaza Ali is President of JazzCash.
getty
As Pakistan stands at the crossroads of digital transformation, a critical gap in the current financial infrastructure becomes increasingly apparent: Our insurance penetration remains just 0.8% of the GDP. This means millions of Pakistani families are vulnerable to financial shocks from health emergencies, accidents or loss of life. This vulnerability is further underscored by recent increases in poverty. In its recent 'Poverty Projections for Pakistan' report, the World Bank noted a 25.3% poverty rate in 2024, up by 7 percentage points from 2023. The report states, 'Poor households face disproportionately higher welfare losses and get pushed deeper into poverty.'
Two emerging markets offer compelling insights into insurance sector transformation. India, with its vision of 'Insurance for All' by 2047, has made significant strides in expanding insurance coverage. While still below the global average and having declined recently, India's life insurance penetration stands at 2.8%. Their insurance regulator, IRDAI, has been instrumental in this growth, implementing innovative strategies such as creating a digital platform for insurance that simplifies product selection.
Simultaneously, Kenya provides another instructive model. Through mobile-based microinsurance platforms such as M-Tiba, the country has dramatically increased insurance access, particularly in rural areas. These digital solutions have enabled low-income Kenyans to access affordable health insurance through mobile technology.
In this global context, we must ask ourselves: What is Pakistan's road map to universal insurance coverage, and how can we leverage our growing fintech ecosystem to achieve this ambitious goal?
The challenges are significant but not insurmountable. In a country where traditional insurance has long been viewed with skepticism and perceived as a luxury rather than a necessity, we need a paradigm shift in how insurance products are designed and distributed. In 2023, our general insurance penetration was about 0.2%.
Pakistan's insurance metamorphosis requires a fundamental redesign of products, distribution and consumer engagement. The traditional model comprising complex products, agent-driven sales and paper-heavy processes has proven inadequate for a population increasingly connected through 196 million mobile cellular subscriptions but historically underserved by formal financial services.
Insurance products need to be simplified and unbundled to meet specific consumer needs rather than offering complex, all-inclusive packages that many find overwhelming and expensive. Microinsurance models with low premiums and focused coverage can serve as entry points for first-time insurance consumers, particularly those with limited financial resources.
Digital-first distribution represents the second transformation pillar. By leveraging Pakistan's growing smartphone penetration, insurers can create mobile-first solutions that eliminate traditional barriers to access.
The most promising approach may be embedded insurance, where protection becomes an organic extension of daily activities. Fintech startups, telecom providers, payment platforms and traditional insurers must form strategic partnerships that combine technological innovation with insurance expertise.
For example, Singapore-based super-app Grab seamlessly integrates accident coverage into every ride, requiring no separate purchase decision from users. European neobank Revolut includes device protection, effectively bundling banking and insurance into one consumer relationship. In Pakistan, digital wallets are exploring similar models, integrating microinsurance into routine transactions such as bill payments and toll fees, quietly introducing many consumers to their first formal protection products without requiring behavioral change.
Insurance doesn't have to be about an agent scaring you into buying a premium by listing all the bad things that could happen to you. Now, it can be as easy as a pop-up asking you if you would like to insure your journey after you pay your toll tax on the motorway.
The path to universal insurance coverage in Pakistan requires addressing several critical challenges. First, we must prioritize financial literacy and insurance awareness. Many Pakistanis remain unaware of insurance benefits or harbor misconceptions about its compatibility with religious beliefs. In India's case, life insurance became a higher priority for Indian consumers during the Covid-19 pandemic. Risk awareness grew during that period, and customers became accustomed to purchasing things digitally. With mobile teledensity at 79.8%, as of February, and broadband coverage of around 59%, insurance providers must develop simple products and leverage digital channels to educate and acquire customers.
Second, our regulatory framework must evolve to encourage innovation while protecting customers. Drawing inspiration from both India's regulatory sandbox approach and Kenya's mobile-first strategy, we can create an environment that encourages insurance innovation. The recent success of micro-insurance products, with premiums as low as Rs. 10 daily, proves that affordability and accessibility can coexist with commercial viability.
Third, we must address our market's unique characteristics. Pakistan needs to leverage its growing digital payment infrastructure and provide both conventional insurance and takaful options. The availability of Shariah-compliant alternatives is crucial for widespread adoption in our market. Fintech startups and insurance companies must work together to provide accessible products tailored to meet customers' diverse needs, particularly in underserved rural areas.
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?