SECP Urges Sales Tax Exemption on Health Insurance to Boost Healthcare Access in Pakistan
The Securities and Exchange Commission of Pakistan (SECP) has strongly recommended that the Federal Board of Revenue (FBR) exempt personal lines insurance, including health insurance, from sales tax to help make healthcare more affordable for the public.
The proposal comes as part of the SECP’s newly released report, “Healthcare Ecosystem in Pakistan,” which provides a comprehensive overview of the country’s healthcare landscape, including key stakeholders, current challenges, and the potential of health insurance in improving healthcare delivery.
Health Insurance Sector Faces Structural Challenges
The SECP report reveals that 99% of the health insurance market in Pakistan is made up of corporate/group policies, while only 1% represents individual or retail coverage. As of December 31, 2023, just 31,000 individuals were covered under personal health insurance, compared to 6.5 million under group health plans.
The report outlines several factors contributing to business losses in the health insurance sector, including:
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Rising medical costs driven by inflation and currency depreciation
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Exaggerated hospital billing
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Delays in claims processing
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Lack of standardized products and innovation
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Fraudulent claims and inconsistencies in third-party administrator (TPA) practices
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Insufficient digitization and weak reinsurance support
Regional Comparison and Global Perspective
Despite healthcare being a constitutional right under Article 38 of the Constitution and a focus under the UN Sustainable Development Goals, Pakistan remains among countries with the highest out-of-pocket healthcare expenses. According to the WHO Global Health Expenditure Database, out-of-pocket health spending in Pakistan stands at 47%, surpassing countries like Sri Lanka (40%), Malaysia (38%), China (33%), and Indonesia (33%).
A Strategic Vision: “Journey to an Insured Pakistan”
The SECP report aligns with its five-year roadmap titled “Journey to an Insured Pakistan”, introduced in December 2023. This initiative aims to transform the insurance sector with a focus on health coverage expansion.
Drawing from international best practices, the report suggests reforms in:
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Product innovation and inclusivity
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Pricing and underwriting
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Oversight and monitoring
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Improved administration and claims processing
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Public-private partnerships for a value-based health insurance model
Leadership Voices Call for Unified Action
SECP Chairperson Akif Saeed emphasized the importance of integrating primary healthcare with universal health coverage, calling for stronger collaboration between public and private sectors.
Commissioner Insurance Mujtaba A. Lodhi echoed this sentiment, advocating for a holistic, national-level strategy that includes active participation from all relevant stakeholders to ensure sustainable healthcare reform.
