The global economic recession has impacted the insurance sector as it has done to other economic and financial sectors. The reinsurance market and the capacity have shrunk and therefore the cost of reinsurance becomes higher as well as the terms and conditions of re-insurance companies become more stringent.

The political turmoil that is consistently prevailing in our society compelled the reinsurance companies to revise their policies. Munich re, one of the biggest reinsurance companies of the world, has actually withdrawn all their business interests from Pakistani market because of the losses the insurance industry of Pakistan has to bear on days like 12th May 2007 and 27th December 2007. They first cancelled all the riots & strike covers and recently decided not to do any type of general insurance business in Pakistan. However, they are still underwriting life insurance business.

I, as an insurance professional, would like that our local reinsurance capacity and the technical know-how should be invigorated on urgent basis. The exchange of business through reinsurance between local companies is more viable than going into the overseas market. We should encourage mutual exchange of business to avoid flow of foreign exchange abroad. As for the reinsurance Treaties, these are now becoming more and more difficult to execute with Rated reinsurance companies and therefore, Pakistan Reinsurance Company and the ECO pool should come up with offer of adequate reinsurance facility.

About World Bank and IMF

Pakistan needs the financial assistance from theWorld Bank and the IMF to meet its financial obligations. Actually speaking our expenses are more than our revenues and therefore we need international financial institutions to provide financial assistance to fill in the gap.

When theWorld Bank and IMF provide us financial assistance to meet our expenses, they also want us to abide by their rules and regulations is actually a blessing in disguise. Because Pakistan abides by a system of financial discipline under compulsion which, unfortunately, Pakistan otherwise does not adheres to at its own.