The Challenge of Buying Insurance in Pakistan -
challenge of buying insurance in Pakistan

The Challenge of Buying Insurance in Pakistan

Insurance is a financial product used as a shield against the risk of a potential loss or expense in the future. In basic terms, insurance is a form of protection that we place against future expenses and accidents. For example, if you buy a health insurance policy, you are protecting against any event that will affect your health.

Technically, the concept is that the responsibility (risk) of your health issues (or whatever you select) is transferred to your insurance company, and you become risk-free for any future health problems. This risk transfer is done in exchange for the money you pay your insurance company. This money paid is known as a premium. Premiums are paid periodically throughout the duration of the insurance policy.

All about Insurance

Conceptually, getting insured is a step towards financial stability, and part of being financially responsible involves getting insured for the various risk aspects of life. Insurance plans are a useful means to save money and protect against events that can affect financial safety like ill health and car damage in Pakistan’s busy urban traffic. Many people also use insurance plans as a savings and investment tool. Insurance policies are long-term products, from five to twenty years and therefore need careful research before you pick one. Selecting any insurance plan or policy requires picking the insurance provider and then paying the premium over the insurance plan’s life.

Insurance plans designed to save for education, marriage, and contingencies like car accidents are also available and are very useful if used properly. With no national retirement and healthcare support system in emerging economies like Pakistan, insurance can play a key role in improving financial stability and planning. However, the problems described below play a role in making Pakistan underperform in insurance compared to its peers.

Gross premiums for Pakistan are 0.92% of GDP, as reported in a recent Insurance Association of Pakistan (IAP) report. These are lower than in countries like India (3.76%) and Vietnam (2.24%), while globally, it is an average of 7.2% of GDP.

There are challenges in buying insurance that affect its off-take in Pakistan. The first challenge is the obvious financial one. The second is the availability of accurate and reliable information and trusted vendors selling insurance products.

The financial challenge is one that we all need to manage independently. The challenge of information means that we research and ask around for guidance.

This requires research into the plans available from different insurance companies. Traditionally this was done through contact with the insurance company. This contact is done through the field staff of the companies. These are commonly known as insurance reps. 

This field force is a major limitation of insurance companies. while there are some that are true gems. the majority are uninformed and prone to distortion. Many willing investors end up becoming dissatisfied with the insurance process and opt for other avenues to invest their savings because of the insurance reps they come across. Most insurance sales reps are prone to offering incomplete and misleading information to their prospects. There is ususally no way of regulating or verifying the information that a sales rep gives you.

The Insurance Process

In Pakistan, various insurance companies and programs offer insurance policies covering basic needs such as car, education,  marriage, and health. Searching and choosing the policy that works best for you marks the first step in planning for any financial emergency, solidifying your future.

Once you prepare a list of companies’ research, it’s time to get the quotes. If you are working with an insurance agent, there is a higher possibility of receiving more than one quote, useful for analysis and comparison pricing.

These quotes are usually in the form of tables that project your insured amount and forecast how much it will amount to each year over the duration of the policy. The different interest rates,(usually ranging around the inflation and SBP interest rates)  annual premium contributions and amounts you will get on claiming for each year are listed in tabular form.

These projections are designed to help you decide which policy and clauses would suit your requirements and can help to clarify your decision-making process. if you don’t get such a calculation sheet you should ask for it so that you know what you are signing up for.

Insurance Clauses

Insurance policies are several pages of hard-to-understand legal jargon and clauses. Most people may read through it without understanding anything written in it. The main thing to know or discuss is the clauses covered in the policy.

For instance, if your investment plan has education and marriage clauses added, it means that you will be eligible to file claims in case of both your child’s marriage and educational needs. If there is only one clause, then only that will apply, and no other need would be catered to.

The clauses are added to a policy when it is being booked or opened. This is where the problem is initiated. Insurance reps are supposed to guide you about the policies, their clauses and convince you to buy them. Most sales reps would design a policy to include the minimum coverage clauses you asked for.

A certain percentage of the premium is paid to the rep as commission. The commission rates differ according to the type of policy and clauses added. This structuring affects the percentage of commission earned. The result is that reps are inclined towards policies and coverage clauses that give them the highest commission regardless of what you are looking for.

The Commission System

This commission system is not as transparent as it should be. Various insurance firms and brokers that you will come across will take advantage of the client’s lack of awareness of market policy and insurance systems. These agents often convince the buyers to buy their designed policy plans without adding clauses relevant to the customer’s needs and disappear when you need them to guide you about processing your claim.

This commission-focused approach means that the policies are not designed according to the buyers’ requirements. There are many cautionary stories of people that were sold an insurance policy linked with their account with promises of full payback in 5 years or on-demand. After a painful claim process, the amount received was less than what the contribution amounted to, leaving the policyholders disgruntled with the entire insurance process.

The blame for this miscommunication lies with the reps as they deliberately omit the facts about the policy to book their sales commissions, not considering what will happen at the time of claim.

A new process has emerged: the sale of insurance products through digital avenues like This is the best option to buy standard insurance policies like car, health, travel, and other plans. Interested customers can learn and compare options in the insurance product of their choice and get in touch with a trained and qualified agent to guide them about the products that would suit their financing needs.

Since the agent is not working on insurance-specific commission, they guide the buyer more thoroughly and ensure that their requirements are met as much as possible.

Claiming your Insurance

When the policy owner needs to claim their insured amount, the claiming process starts. Ideally, the insurance agents become the handlers of the claim and should facilitate processing the claim. this is not the case for us in Pakistan.

Claims are the most painful and abused segment of the insurance industry, particularly for individual users. The poorly structured policies usually do not match user expectations. Users who accepted their sales rep’s advice and opted for policies with the clauses that the rep suggested or placed without informing get an unpleasant shock when they start to process their claims.

The claims need to be lodged personally, in physical form, even if they were sold online. There is little traceability and almost no accountability for turnaround times. Users have little recourse to question why the claim is so little and why it isn’t what they expected it to be.

This is where the online insurance sellers are making a difference for their customers. The platform agents help clients process their claim applications and offer detailed guidelines for submitting their claim applications. They usually provide sufficient contacts and appropriate guidance to deal with an accidental situation. At, we have a claim assistance service to facilitate this huge need of insurance clients.

Internationally some significantly advanced models can be used to improve the insurance industry’s deliverables in Pakistan. These are being used as models in offering online insurance sales through platforms like

Despite the dire conditions that are currently involved in the process of buying insurance directly from sales reps, everyone should consider insurance to secure their future and have a safety net for times of difficulty.

At present, the best option for researching and buying insurance is through an online platform like The purpose and utility you decide for the insurance is optional but having an insurance policy is essential for having a safe and convenient investment to protect your way of life.

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