ISLAMABAD: The Asian Development Bank (ADB) has approved a $700 million policy based loan to support reforms in Pakistan insurance sector.
The aim of the program is to expand insurance coverage, reduce financial protection gaps, and increase private sector involvement. It is also expected to support long term economic stability and growth in the country.
According to ADB, the Insurance Transformation Program will help strengthen Pakistan financial system by making the insurance market deeper and more modern.
It will also improve financial protection for households, businesses, farmers, and public finances against disasters, health issues, and climate related risks. The bank said that better insurance coverage can reduce financial stress aftershocks and help people recover faster, while also lowering pressure on government resources.
ADB Country Director for Pakistan, Emma Fan, said the program will shift the insurance system from an old rules based structure to a modern and market driven framework.
She added that the reforms will help bring more long term investment into the country and improve financial protection for both individuals and businesses.
The bank noted that Pakistan financial system is mostly dependent on banks, while insurance coverage is still very low at around 0.7% of GDP. Because of this, many people, including farmers and low income households, remain exposed to risks from disasters, health problems, and economic shocks.
The program will also support the development of new insurance products that are designed for vulnerable groups, including women and farmers. It will use digital systems, satellite data, and risk based tools such as parametric insurance to improve access and speed up claims. These steps are expected to make insurance services more efficient and easier to use.
In addition, the loan will help support capital market development and private pension systems. This will encourage long term savings, improve bond market growth, and support investment in infrastructure projects.
Separately, the Sindh government recently confirmed $14 billion in ADB support for a drainage project in Thatta and Sujawal districts.
ADB total new commitments to Pakistan also rose to $3.672 billion in the 2025 calendar year, showing a 22% increase compared to the previous year.
