Pakistan Prime Minister Nawaz Sharif’s $46 billion plan for an economic corridor with neighboring China as part of his revival push is promising to boost the prospects of the nation’s insurers.
Adamjee Insurance Co. and Jubilee General Insurance Co., which control about 35 percent of the local non-life market, say premiums are set to increase as much as 18 percent by 2022. The project may generate about 30 billion rupees ($294 million) in collections in five to seven years, according to Jubilee.
“Due to the nature of investment, premiums will be largely from property and marine insurance,” Tahir Ahmed, chief executive officer of Jubilee Insurance, said in an e-mail.
The trade corridor, which includes roads, ports, power plants and dams, is meant to provide a shot in the arm to Pakistan’s $247 billion economy that is facing terrorism, blackouts and floods. Sharif is seeking to accelerate growth to the fastest pace since 2008 with the project and more infrastructure spending.
The 3,000-kilometer (1,850 miles) belt stretching from Xinjiang in western China to Gwadar on the Arabian Sea would also provide another route for China to import oil from the Middle East.
Insurance penetration in Pakistan is 0.8 percent of gross domestic product, compared with 4.5 percent in neighboring India, and the world average of 8 percent, Naim Anwar, CEO of Crescent StarInsurance Ltd., said in a recent interview.
There are about 40 insurers in Pakistan, offering conventional and Islamic products to the nation’s population of about 200 million. Social beliefs, lack of awareness and reach have limited the market, according to Anwar. The only foreign insurer operating in Pakistan is New Hampshire Insurance Co.
The corridor may help business grow up to 50 percent in the next five years, from the current 10 percent growth, Anwar said.
“A bulk of the premiums will be generated from construction phase expected to start in 2015,” Adamjee’s CEO Muhammad Ali Zeb said by e-mail. “As work continues, more industries will emerge and premiums will take off.”
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