![Only 2.77% of the total registered vehicles in Pakistan are insured](http://voiceuppakistan.com.pk/wp-content/uploads/2023/08/car-insurance-300x169.jpg)
Lahore: According to the shocking statistics of the Securities and Exchange Commission of Pakistan (SECP), Only 2.77% of the total registered vehicles in Pakistan are insured or 8.3 lakh vehicles are insured out of the total 3 crore registered vehicles in Pakistan. Pakistan lags behind India, Saudi Arabia, Bangladesh, Sri Lanka and even Uganda in terms of insured vehicles. These revelations have been made in a report recently released by SECP titled “Status of Third Party Motor Insurance in Pakistan”.
Report, out of 3 crore registered vehicles, 2.3 crore motorcycles and 7 million cars are included. Of these, only 12,557 vehicles have Motor Third Party (MTP) insurance while 9 lakh vehicles have comprehensive motor insurance.
The main difference between the two types of insurance is what they cover. MTP covers damage to the vehicle caused by a third party while ‘Comprehensive Car Insurance’ also covers damage to the vehicle caused by the owner.
READ:the reasons for the annual 20% decline in vehicle financing
Azfar Arshad, Chief Operating Officer of Jubilee General Insurance and former Chairman of Insurance Association of Pakistan, says that motor insurance is fundamental in this industry and around 50 percent of the world is insured for vehicles. The overall insurance rate is also higher in areas where there are more vehicles, but this rate is disappointingly low in Pakistan.
Why motor insurance is so low in Pakistan compared to other countries?
In this regard, Azfar Arshad said, “This problem is actually not a problem in Pakistan.” In countries where car insurance rates are high, this is because it is a legal requirement. In such countries you can drive and buy a car without a valid insurance certificate. If you do not have an insurance policy, you cannot register the vehicle. Sometimes law enforcement agencies can look at car insurance during a routine checkup. If you don’t have it, then there are fines and penalties.
He said that you can easily distinguish between countries with low car insurance rates. In countries where enforcement is high, you’ll see unusually high rates. Is the answer simply to make car insurance compulsory? Absolutely not.
Aamir Hameed, Executive Director and Chief Operating Officer of United Insurance, says, “There are a large number of unregistered and unlicensed vehicles in the country that do not have any insurance. This is why implementing compulsory insurance is a big challenge.” However, Amir Raheed claims that there is an easier solution to increase insurance rates.
Amir Hameed, “The first and foremost reason behind the low rate of car insurance in Pakistan could be the lack of awareness among the general public about the importance and benefits of motor insurance. Most people may not realize what financial protection motor insurance can provide to their vehicle in case of accidents, theft or damage. Another reason may be that some people may be afraid of the burden of additional costs. Some people see motor insurance as an additional expense and prioritize it over other financial obligations.
He added, “The complexities of the insurance industry and the process of getting insurance can deter people from getting motor insurance. Different policies, coverage options and lengthy paperwork sometimes confuses the consumer.”
All these concerns are also valid. However, Arshad Azfar points out that even if the above barriers are removed, there will still be an inherent factor that will keep car owners from taking out insurance.
READ:Kia Lucky Motors has closed 4 dealerships in Pakistan
He explained that law enforcement in Pakistan is a big challenge. In most cases, the victims of traffic accidents belong to the lower income class, while the perpetrators of the accident usually represent the better-off economic class. As a result, it is difficult for the victim to take legal action against the responsible party. It is this mystery that is essential for third party involvement for motor insurance. Its purpose is to protect the victims of traffic accidents, not the driver. You don’t take it for yourself. Rather, they take it so that no one else is harmed by your car.
Amir Hameed says a multi-pronged approach is needed to increase the penetration of motor insurance in Pakistan. Along with some strategies, it is important to develop awareness about the benefits and legal responsibilities of motor insurance. Insurance procedures will have to be simplified. Easier access, flexible payment plans and increased fixed coverage can increase motor insurance rates. Another key strategy is cooperation with government agencies to enforce mandatory insurance laws. Partnerships with financial institutions and the automotive industry can also prove effective for insurance.”
![voiceuppakistan](https://voiceuppakistan.com.pk/wp-content/litespeed/avatar/bdbe598fcaa2e6ca46e4a8f6c0a90711.jpg?ver=1725488302)
VOICEUP PAKISTAN
Breaking News from Pakistan And Around The Globe!