ADB approves $700 million loan to modernize Pakistan’s insurance sector

In a statement, the Manila-based lender said the funding will support the Insurance Transformation Programme, which is designed to expand insurance

ISLAMABAD: The Asian Development Bank (ADB) has approved a $700 million policy-based loan to help Pakistan reform and strengthen its insurance industry, aiming to improve financial protection and economic resilience across the country.

In a statement, the Manila-based lender said the funding will support the Insurance Transformation Programme, which is designed to expand insurance coverage, attract greater private-sector participation, and build a more resilient financial system. The initiative seeks to provide better protection for households, businesses, farmers, and public finances against disasters, climate-related events, and other economic risks.

ADB Country Director for Pakistan, Emma Fan, said the programme would shift the insurance sector from an outdated regulatory structure to a modern, risk-based framework. She noted that the reforms would encourage long-term investment, improve financial security for citizens and businesses, and create a more competitive insurance market.

According to the ADB, Pakistan’s insurance sector remains underdeveloped, with insurance penetration accounting for only 0.7 percent of GDP. As a result, many individuals and businesses remain vulnerable to financial losses caused by environmental, health, and economic shocks.

The reform programme will promote innovative insurance products, including digital and disaster-responsive solutions, with a special focus on farmers, women, and low-income households. New measures will also encourage the use of digital platforms, satellite-based risk assessment technologies, and faster claims-processing systems to improve access to insurance services.

The ADB said the initiative will additionally support capital market growth and private pension schemes by encouraging long-term savings and investment in infrastructure and bond markets.

The approval comes as the ADB continues to expand its financial support for Pakistan. In 2025, the bank’s commitments to the country reached $3.67 billion, marking a significant increase from the previous year.