The programme seeks to expand insurance coverage and reduce protection gaps, and the loan would help stimulate private sector participation and support sustainable economic growth.

The Insurance Transformation Programme will strengthen Pakistan’s financial resilience by deepening insurance markets and expanding financial protection for households, businesses, farmers, and public finances against extreme weather events, disasters, and life-cycle risks, said a press release issued on Thursday.

The reforms are expected to reduce financial vulnerabilities, support faster recovery from shocks, and lessen pressure on public finances following disasters and other crises.

“This programme supports the transformation of Pakistan’s insurance sector from a legacy, rules-based framework to a modern, risk-based, and market-oriented system,” said ADB Country Director for Pakistan Emma Fan.

“The reforms will help mobilise patient capital for development, expand financial protection for households and businesses, and support a more competitive, inclusive, and resilient insurance market,” Fan added.

Pakistan’s financial system remains heavily bank-dominated, while insurance penetration stands at only 0.7% of the gross domestic product (GDP).

As a result, many households, businesses, and farmers remain financially exposed to environmental, health, and economic shocks.

The loan will support resilience initiatives and disaster risk financing by expanding inclusive and shock-responsive insurance products, particularly for farmers, women, and vulnerable households.

In particular, the programme will promote insurance solutions tailored to the needs of women and girls through targeted product design, digital access, and sex-disaggregated data.

These measures aim to expand insurance coverage through digital distribution systems, satellite-based risk assessment, parametric insurance solutions, and risk-pooling mechanisms, while improving claims settlement and access to insurance services.

Additionally, the programme will support the development of capital markets and private pension products by mobilising long-term savings for infrastructure financing, bond market development, and annuity-based pension systems.