A micro-insurance scheme for low-income households and vulnerable communities is on the cards as the Securities and Exchange Commission of Pakistan (SECP) has started working on the plan, Business Recorder reported.

According to the SECP, the government would engage the insurance companies for the task. They would link to initiatives like the Benazir Income Support Program and the Sehat Sahulat Program.

The SECP has proposed that micro/inclusive insurance schemes may be embedded with other financial services like credit, savings and remittances to increase financial inclusion.

Through the initiative, the government has planned to seek insurance companies’ support for tailor-made products that are affordable and reliable. The idea is to launch it in the areas of health insurance, crop insurance and livestock insurance and mass-scale disaster insurance.

Pakistan suffered a loss of $30 billion in the wake of the 2022 monsoon floods, according to estimates. Up to 9.1 million people were pushed into poverty and a further 1.9 million fell into multi-dimensional poverty, the United Nations Environment Programme (UNEP) said.

Between 1992 and 2021, climate and weather-related disasters in Pakistan resulted in a total economic loss of $29.3 billion.

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Such a scheme also targets the population affected by natural disasters in the country, providing an opportunity for insurers to target farmers, labourers, and shopkeepers.

The commission is of the view that the disaster micro-insurance scheme can facilitate post-disaster recovery, enable swift reconstruction and reduce the social and economic impact of disasters.

Only 9.2% of the population in Pakistan is covered by the social protection programme and 8.4% of the population is affiliated with the social health protection scheme, according to the ILO-Social Protection platform.