The Asian Development Bank (ADB) has approved a $700 million policy-based loan to support reforms aimed at strengthening Pakistan’s insurance sector and expanding financial protection across the country.
In an official statement, the Manila-based lender said the programme, titled the Insurance Transformation Programme, is designed to reduce protection gaps, expand insurance coverage, and encourage greater participation from the private sector. The initiative is also expected to support sustainable economic growth by improving financial resilience.
The ADB said the reforms will help transform Pakistan’s insurance industry from a traditional, rules-based system into a modern, risk-based and market-oriented framework. It added that the changes will enhance financial protection for households, businesses, farmers, and public finances, particularly in response to natural disasters, climate-related risks, and other economic shocks.
According to the bank, Pakistan’s financial system is still largely dominated by banks, while insurance penetration remains low at around 0.7 per cent of GDP. As a result, many individuals and businesses remain vulnerable to unexpected financial losses.
ADB Country Director for Pakistan Emma Fan said the programme will help mobilise long-term capital, expand insurance access, and promote a more inclusive and competitive insurance market.
The reforms will also support disaster risk financing by introducing inclusive and shock-responsive insurance products, especially for farmers, women, and vulnerable groups. Digital platforms, satellite-based risk assessment tools, and parametric insurance solutions are expected to improve efficiency and accessibility.
The programme further aims to strengthen capital markets and private pension systems by encouraging long-term savings and investment in infrastructure financing and bond markets.
Officials said targeted insurance solutions for women and girls will be introduced through improved product design, digital access, and better data collection.
The loan follows other recent ADB commitments in Pakistan, including funding for infrastructure and development projects, as the institution continues to support economic stability and resilience in the country.