- Takaful offers potential, but lack of knowledge, complex policies hinder adoption
Interview with Mr Tariq Hussain — Corporate Laws, Taxation and Insurance Expert
PAGE: Tell me something about yourself, please:
Tariq Hussain: I am Fellow of Cost & Management Accountants. My qualification details are: FCMA. FCIS, MBA, MA (Eco) M.Phil. (Eco) besides that I have about 29 years of experience for working with corporate sector including worked as Director/HOD Insurance Division SECP and I am also known as Corporate Laws, Insurance Expert and Tax Management Specialist.
PAGE: Why do Pakistanis remain reluctant to use insurance services?
Tariq Hussain: Despite being present for decades and regulated by authorities, insurance penetration in Pakistan remains very low — only around 0.9% of GDP compared to the global average of over 7%. This low participation reflects a general reluctance among the public, influenced by various factors such as lack of awareness, limited access, low trust, affordability concerns, and religious sensitivities.
Many people in Pakistan, particularly in rural or low-income areas, are unfamiliar with how insurance works or believe it is only meant for the wealthy. Religious concerns also discourage participation, as conventional insurance is seen by some as incompatible with Islamic teachings due to the presence of interest (riba) and uncertainty (gharar). While Islamic alternatives like Takaful exist, awareness and understanding of these options remain low. Public trust in insurance companies is also weak, with many people having experienced or heard of delayed or rejected claims, leading to a perception that insurers are unreliable. Financial limitations further discourage uptake, as many households prioritize basic needs over spending on insurance premiums. People often rely on informal support systems like family or community assistance during times of crisis instead. Moreover, most insurance providers focus on urban areas and formal employment sectors, leaving small towns, rural communities, and informal workers without appropriate services or easy access. Insurance policies are often complex, filled with difficult language, and the procedures for buying and claiming can be time-consuming and confusing. Negative experiences with insurance — such as a denied claim—spread quickly through word of mouth, further reinforcing public hesitation, while positive experiences rarely gain the same attention. Despite these challenges, the insurance sector in Pakistan has great potential to support financial stability and social protection. To unlock this potential, stakeholders must prioritize public education, build trust, simplify products, and ensure outreach to underserved communities, all while aligning with the cultural and religious context of the population.
PAGE: How would you comment on the lack of awareness about actual risk levels?
Tariq Hussain: A major barrier to insurance adoption in Pakistan is the lack of awareness about how insurance works and the risks it can protect. Many people, especially in rural areas and low-income areas, underestimate the likelihood of risks like illness, accidents, or natural disasters. They often believe these events are rare or manageable through informal family, community support and governmental support, which leads to a lower perceived need for insurance. Religious concerns also play a role, as conventional insurance is often viewed as non-compliant with Islamic principles, while awareness and accessibility of Shariah-compliant alternatives like Takaful remain limited. Furthermore, public trust in insurance providers is low due to past experiences of delayed or denied claims and poor customer service. Affordability is another key issue, as many households live on tight budgets and view insurance as a non-essential expense. Insurance services are often urban-focused, with products that do not cater to the needs of informal workers, small farmers, or rural communities. Complex policy language and difficult claim procedures further discourage people from using insurance. Negative word of mouth spreads quickly in tight-knit communities, reinforcing mistrust and resistance, while positive experiences rarely gain the same attention. Despite these challenges, the insurance sector in Pakistan holds significant potential to strengthen financial resilience and economic security. Realizing this potential requires a multi-pronged approach that includes public education, trust-building, simplification of products, wider geographic outreach, and alignment with the cultural and religious values of the population. With the right efforts, insurance can become a valuable tool in Pakistan’s path toward greater financial inclusion and social protection.
PAGE: Around 0.9% Pakistanis have insurance coverage, compared to 4% in India. What is your take on it?
Tariq Hussain: The fact that only 0.9% of Pakistanis have insurance coverage, compared to approximately 4% in India, highlights a significant gap. India has made notable progress in expanding insurance access through digital platforms, government-backed schemes, and microinsurance products that make insurance more affordable and accessible. In contrast, Pakistan has yet to launch large-scale programs to promote insurance, and it is often seen as unnecessary or too expensive. To improve, Pakistan must focus on public education, offer insurance options that align with cultural and religious values, and enhance access, especially in rural areas. One key factor contributing to this gap is the lack of strong regulatory leadership from the Securities and Exchange Commission of Pakistan (SECP). As the regulator, SECP plays a crucial role in shaping the insurance market, ensuring consumer protection, and promoting transparency. However, it has been slow to implement reforms like improving the claims process, enhancing trust, and ensuring that products are affordable and accessible. SECP’s proactive involvement is essential for building trust and increasing insurance coverage across the country. Without this support, insurance companies will struggle to expand their reach and build public confidence.
PAGE: Insurers promote economic growth by keeping businesses afloat during emergencies? What is your standpoint?
Tariq Hussain: Insurers play a vital role in boosting economic growth by helping businesses stay afloat during emergencies. When businesses face unexpected events like natural disasters, accidents, or health crises, insurance provides financial support that helps them recover. This enables companies to continue operating, pay their employees, and avoid bankruptcy. Insurance not only helps individual businesses but also supports the wider economy by keeping jobs intact and ensuring the flow of goods and services. With insurance, businesses are more confident in taking risks and making investments, which leads to greater innovation and growth. Without insurance, businesses would struggle to survive during tough times, slowing down economic progress. Many countries have successfully implemented insurance and government support systems that help businesses stay afloat during emergencies. For example, the United States used business interruption insurance and government programs like the Paycheck Protection Program (PPP) to help businesses recover during the COVID-19 pandemic. Japan has comprehensive disaster insurance to help businesses rebuild after earthquakes and tsunamis, while Germany offers both business insurance and financial assistance during economic downturns or natural disasters. Australia provides insurance options and government recovery grants for businesses affected by disasters like bushfires or floods. The United Kingdom implemented programs like the Coronavirus Job Retention Scheme, helping businesses retain employees during the pandemic. These examples show how insurance, combined with government support, helps businesses recover from emergencies, maintain operations, protect jobs, and contribute to economic growth.