ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has strongly recommended the Federal Board of Revenue (FBR) to exempt personal lines insurance from the sales tax including health insurance.
The SECP on Wednesday released a comprehensive report titled “Healthcare Ecosystem in Pakistan.” With a special focus on the role of health insurance, the report highlights the state of the healthcare ecosystem, relevant stakeholders, market dynamics, and performance, along with key challenges hindering the optimization of healthcare delivery.
The Insurance Reforms Committee formed by the Ministry of Commerce also recommended the removal of tax on health insurance as it increases the cost of insurance and eventually, makes healthcare expensive for the population.
The assessment of the private health insurance market reveals that 99 percent of the health insurance market comprises corporate/ group business and only one percent with the individual/ retail market in terms of gross written premium for the year ended December 31, 2023. Only 31000 persons are covered under individual health and 6.5 million persons are covered under group health insurance.
In a nutshell, the primary reasons for health insurance business losses include the rising costs of medical treatments due to inflation and currency depreciation, exaggerated bills of the insured population from private hospitals, and delayed claims management at the time of renewal and pricing, lack of product innovation and standardization, infrequent and inconsistent monitoring on underwriting practices, fraudulent claims reporting and varied third-party claims administrators practices along with inadequate automation and digitized processes, and lack of reinsurance support are some of the key causes of health insurance business in Pakistan.
Despite healthcare being a priority area for the Government of Pakistan—as enshrined in Article 38 of the Constitution of Pakistan and recognized as one of the United Nations’ (UN) Sustainable Development Goals — Pakistan ranks among the highest in out-of-pocket expenditures, according to the WHO Global Health Expenditure Database. At 47 percent, Pakistan’s out-of-pocket spending far exceeds that of Sri Lanka (40pc), Malaysia (38pc), and China and Indonesia (both at 33pc).
The development of the health insurance sector is one of the operational outcomes of the SECP’s five-year strategic plan, “Journey to an Insured Pakistan,” launched in December 2023. The report identifies various challenges and specific bottlenecks impeding the growth of the health insurance sector. Drawing from international best practices, it offers a strategic roadmap centred on key reform areas, including product innovation and inclusivity, conduct and administration, pricing and underwriting, oversight and monitoring, and creating a value-based health insurance ecosystem with enhanced private-sector participation.
In his message, SECP Chairperson Akif Saeed emphasized the need for sector-wide integration, particularly the amalgamation of primary healthcare with universal health coverage through the participation of both public and private sectors. Commissioner Insurance Mujtaba A Lodhi further asserted that a broad-based, holistic national-level strategy — with the ownership of all relevant stakeholders—is essential for sustainable and comprehensive reforms in the sector.
Copyright Business Recorder, 2025
