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ISLAMABAD: The Asian Development Bank has approved a $700 million policy-based loan for Pakistan to support a major reform program aimed at transforming the country&rsquo;s insurance sector, expanding financial protection for citizens, and reducing the burden on public finances after disasters and economic shocks, said an ADB statement, posted on its website on Thursday. Support for Insurance Transformation ProgramThe ADB statement said that the loan will be used under the Insurance Transformation Program, which seeks to modernize Pakistan&rsquo;s insurance market, improve access to insurance products, and help households, businesses, farmers, women, and vulnerable communities better manage risks linked to extreme weather, health emergencies, disasters, and life-cycle challenges. According to the ADB statement, which is also posted on the bank&#39;s X account, the program is designed to strengthen Pakistan&rsquo;s financial resilience by deepening insurance markets and closing protection gaps in a country where insurance coverage remains extremely low.<div class="fr-embed"><div class="twitter-tweet twitter-tweet-rendered" style="display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;"><iframe id="twitter-widget-0" scrolling="no" frameborder="0" allowfullscreen="true" style="position: static; visibility: visible; width: 550px; height: 616px; display: block; flex-grow: 1;" title="X Post" src="https://platform.twitter.com/embed/Tweet.html?dnt=false&embedId=twitter-widget-0&features=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%3D%3D&frame=false&hideCard=false&hideThread=false&id=2067512433338638619&lang=en&origin=https%3A%2F%2Fmain.d1wrm1qseko1cp.amplifyapp.com%2Farticles%2F&sessionId=77e7fab649278f7a8f5ba32ee0693fc6236c1232&theme=light&widgetsVersion=6a3ad42b224df%3A1778106238597&width=550px">&nbsp;&nbsp;&nbsp;&nbsp;</iframe></div></div> Pakistan&rsquo;s insurance coverage remains among the lowestPakistan&rsquo;s insurance penetration currently stands at only 0.7% of GDP, leaving millions of citizens financially exposed to floods, droughts, crop losses, health expenses, accidents, and other unexpected shocks. The statement further said that the purpose of the loan is to help Pakistan shift its insurance sector from an outdated, rules-based system to a modern, risk-based, and market-oriented framework. Reforms to modernize regulation and supervision&quot;The program will support the government and regulators in introducing reforms that encourage innovation, strengthen supervision, attract private sector participation, and make insurance more accessible and responsive to people&rsquo;s needs,&quot; added the statement. According to the statement, the ADB Country Director for Pakistan Emma Fan said the program supports the transformation of Pakistan&rsquo;s insurance sector into a more competitive, inclusive, and resilient market. &ldquo;This program supports the transformation of Pakistan&rsquo;s insurance sector from a legacy, rules-based framework to a modern, risk-based, and market-oriented system,&rdquo; the ADB statement quoted her. &quot;She added that the reforms would help mobilize long-term capital for development, expand financial protection for households and businesses, and support a stronger insurance market.&quot; Disaster risk financing takes center stageA major focus of the loan, the statement added, will be on disaster risk financing and climate resilience. Pakistan has repeatedly faced devastating climate-related disasters, including floods and extreme weather events, which place heavy pressure on government finances. &quot;Through this program, insurance solutions will be developed to help citizens and the state recover faster after such shocks.&quot; New products planned for farmers, women, and vulnerable householdsThe ADB statement went on to say that the loan will support the expansion of inclusive and shock-responsive insurance products, especially for farmers, women, and vulnerable households. &quot;These products are expected to help protect people from crop failures, natural disasters, health risks, and income losses.&quot; &quot;For farmers, the program aims to improve access to insurance tools that can reduce financial losses from climate shocks,&quot; it added. &quot;For women and girls, the reforms will support insurance products designed around their specific needs, backed by digital access and sex-disaggregated data to make coverage more targeted and inclusive.&quot; Digital insurance and faster payouts to be promotedThe program will promote the use of digital distribution systems, making it easier for people to buy insurance and receive services through technology. It will also encourage satellite-based risk assessment, parametric insurance, and risk-pooling mechanisms, which can help provide quicker payouts after floods, droughts, or other disasters. Claims settlement reforms aim to build public trustThe initiative is also expected to improve claims settlement systems, making insurance services more reliable and accessible for policyholders. Faster and fairer claims processing is seen as essential to building public trust in Pakistan&rsquo;s insurance industry. Capital markets and pension products also in focusBeyond household and disaster protection, the ADB-supported program will also help Pakistan develop its capital markets and private pension products. The objective is to mobilize long-term savings for infrastructure financing, bond market development, and annuity-based pension systems. Private sector participation expected to increaseThe program is also expected to encourage greater private sector participation in the insurance industry. By creating a more modern and competitive market, the reforms aim to attract investment, improve product diversity, and bring more citizens into the formal financial system. Broader push for economic resiliencePakistan&rsquo;s financial system remains heavily dependent on banks, while insurance and pension markets remain underdeveloped.&nbsp; ADB says this has limited the country&rsquo;s ability to manage financial risks and mobilize long-term domestic resources. The $700 million loan is therefore not only aimed at expanding insurance coverage but also at supporting broader economic resilience. By helping people, businesses, and the government manage risks more effectively, the program is expected to reduce financial vulnerabilities, support faster recovery after crises, and lessen the fiscal burden on the state. ADB says program supports inclusive growthADB said the initiative is part of its broader support for sustainable, inclusive, and resilient growth in Pakistan and across Asia and the Pacific. The Manila-based lender, founded in 1966, is owned by 69 members, including 50 from the region.

Economy

The loan will be used to reform Pakistan's insurance sector, expand climate and disaster risk protection; support vulnerable groups; modernize regulation, and strengthen financial and economic resilience.

ADB approves $700M loan to expand insurance cover in Pakistan

FLAT ROCK: US citizens are facing steep increases in home insurance premiums as climate-related disasters become more frequent across the United States, including in regions once considered relatively safe. Tony Dunn, 69, moved from California to the mountains of North Carolina after losing his home in the deadly 2018 Camp Fire wildfire. But six years later, Hurricane Helene devastated his new community, pushing his homeowners&rsquo; insurance premium up nearly 30 percent to about $4,400 annually. &ldquo;It was a bit of a shock when we got the insurance bill last year,&rdquo; Dunn told AFP. Despite the rising costs, Dunn says going without insurance is not an option after insurance payouts helped him and his wife rebuild after the California wildfire. Increasing insurance costs Experts say insurance costs are climbing not only in coastal states such as Florida, but also across inland regions increasingly exposed to flooding, hailstorms, and extreme weather. In Henderson County, North Carolina, average homeowners&rsquo; insurance costs rose 86 percent between 2018 and 2024, according to researchers Benjamin Keys and Philip Mulder. Nationwide, premiums increased 58% over the same period. Scientists say climate change is intensifying hurricanes and other extreme weather events. A 2024 study by the World Weather Attribution network found that climate change worsened conditions linked to Hurricane Helene. North Carolina resident Dee Dee Buckner, whose home was destroyed in flooding caused by Helene, said rising insurance costs are becoming difficult to manage. &ldquo;If they go up any higher, I can&rsquo;t,&rdquo; she said. Buckner said she now carries only a limited homeowners&rsquo; insurance policy, while her flood insurance costs have risen to more than $1,700 annually. Most standard US homeowners&rsquo; insurance policies do not cover flood damage, requiring separate flood insurance coverage. Researchers say insurers are also facing higher reinsurance costs as climate risks grow, contributing to rising premiums for homeowners. Economist Sarah Dickerson of the Kenan Institute of Private Enterprise said climate-related losses are no longer confined to traditionally high-risk areas. &ldquo;Climate-related losses are impacting all parts of the state,&rdquo; she said.

Climate

Rising climate-related disasters across the United States are driving a sharp increase in homeowners’ insurance costs, leaving many families underinsured and struggling financially as extreme weather affects both coastal and inland regions.

Articles tagged with "Insurance"

ADB approves $700M loan to expand insurance cover in Pakistan

Climate disasters drive sharp rise in US home insurance costs

ADB approves $700M loan to expand insurance cover in Pakistan