- September 21, 2022
- Posted by: SHMA Consulting
- Category: Uncategorized
Pakistan is in the midst of an economic crisis. The country is facing a balance of payments crisis, a fiscal crisis, and an energy crisis. These problems have led to soaring inflation, rising unemployment, and growing poverty.
In 2022, there is a lot of uncertainty about whether or not Pakistan will collapse as an economic and political force in the region. The current government is unpopular and there is a lot of unrest in the country. This has led to some people calling for early elections while some are determined to continue the current government tenure.
The insurance industry in Pakistan has been hit hard by the country’s economic crisis, with data and statistics showing a sharp decline in business over the past year.
According to the Pakistan Insurance Association (PIA), the country’s insurance sector has seen a drop of around 25% in terms of new business premiums during the fiscal year 2020-21. This is in comparison to the previous year’s figures, which showed a healthy growth of around 15%.
The PIA attributes this decline to several factors, including the ongoing pandemic and resulting economic downturn, as well as rising inflation and interest rates. These factors have all contributed to a decrease in consumer spending power, leading to less demand for insurance products.
In addition, the PIA notes that there has been an increase in policy cancellations and lapses due to financial difficulties faced by policyholders. This has also had a negative impact on insurers’ bottom lines.
Inflation and interest rates are rising, while the value of the Pakistani rupee is falling. This has led to increased premiums and decreased policyholder benefits, as well as diminished profitability for insurers.
The current economic crisis in Pakistan is expected to worsen in 2022, with data and statistics from The World Bank showing that the country’s GDP growth will slow to 2.4% in FY2022. This will have a negative impact on the insurance industry, as businesses and consumers alike will be feeling the pinch financially.
To survive and thrive in such a challenging environment, insurers need to be innovative and agile. They must focus on providing value-added products and services that meet the needs of their customers. Additionally, they need to adopt strong risk management practices to safeguard against losses.
The situation is unlikely to improve anytime soon, with experts predicting that Pakistan’s economy will continue to struggle for at least the next two years. This means that the insurance industry is likely to face tough times ahead, with further declines in business expected.