IMF & ADB Recommend Insurance Cover to Combat Climate Change Losses in Pakistan
Both the IMF and ADB have emphasized the need for insurance cover to reduce financial losses.
Islamabad — The International Monetary Fund (IMF) and the Asian Development Bank (ADB) have proposed introducing insurance coverage to mitigate the damages caused by climate change and natural disasters in Pakistan.
Sources from the Ministry of Finance revealed that Pakistan has become the fifth most affected country globally by climate change and natural calamities. Every year, floods, heavy rains, and other natural disasters cause losses worth billions of dollars in Pakistan.
In this context, both the IMF and ADB have emphasized the need for insurance cover to reduce financial losses. The IMF has urged that insurance coverage be made mandatory for all new development projects to safeguard against natural disasters.
According to officials, government development projects currently lack adequate insurance coverage for such risks. Pakistan faces significant annual losses due to floods and other calamities. The ADB has also stressed the importance of providing insurance cover for natural disasters and is preparing a comprehensive plan to develop the insurance sector.
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Despite the growth of Pakistan’s banking industry, the insurance sector remains underdeveloped by international standards. The Securities and Exchange Commission of Pakistan (SECP) requires experts to strengthen its insurance division. Currently, only about 7.09 million people out of the country’s 240 million population have life insurance. Furthermore, there is no public disaster risk insurance program available.
Out of 8.2 million farmers, fewer than 1 million have any form of insurance. Similarly, only 300,000 out of 32 million properties are insured. Pakistan lags far behind other regional countries in insurance premium collection.
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