Punjab Makes Motor Insurance Mandatory for Public Transport, Digital System Goes Live

Punjab’s motor third-party insurance is now digitally linked to its route permit system, meaning public transport vehicles in the province must carry valid insurance before a route permit is issued or renewed, with compliance verified in real time.

What Has Been Launched

The Securities and Exchange Commission of Pakistan, in collaboration with the Government of Punjab, the Central Depository Company, and the Insurance Association of Pakistan, formally launched a digital integration that connects public transport route permits directly to third-party motor insurance compliance.

Punjab has digitized its Vehicle Route Permit Regime and integrated it with CDC’s Motor Insurance Repository. When a public transport operator applies for or renews a route permit, the system automatically verifies whether valid third-party insurance is in place, instantly, digitally, and without manual intervention. No insurance means no permit. The enforcement is built into the process itself.

The ceremony was attended by SECP Chairman Dr. Kabir Ahmed Sidhu, Secretary Punjab Transport Authority Hassan Ahsan, and CDC CEO Badi-ud-Din, alongside senior SECP commissioners, directors, and representatives from insurance companies and industry stakeholders.

What It Means for Road Users

The direct beneficiaries of this integration are the people who use public transport in Punjab every day, passengers, drivers, and anyone sharing the road with a public transport vehicle.

Third-party motor insurance exists to ensure that when an accident happens, victims receive financial compensation without being left to absorb the costs of injury, medical treatment, or property damage on their own. By making insurance a non-negotiable condition of route permit issuance and renewal, Punjab has created an enforcement mechanism that does not depend on periodic spot checks or manual inspections. Compliance is structural; it happens automatically at the point of licensing.

Speaking at the ceremony, SECP Chairman Dr. Kabir Sidhu described the initiative as a shift toward digital enforcement and emphasised insurance as a critical tool for financial protection. He stressed the need for timely compensation for accident victims and stronger road safety measures across the province.

The Scale of the Challenge in Punjab

Dr. Kabir provided data that highlights why this initiative is urgently needed. According to Punjab Excise and Taxation records, approximately 24 million vehicles were registered in Punjab alone as of March 31, 2024. Pakistan’s Motor Insurance Repository currently holds data on approximately one million insured vehicles, a figure that highlights how significant the insurance gap remains even within the province.

Pakistan recorded 9,371 road accidents in 2023, resulting in 5,902 deaths and over 11,000 injuries. These numbers reflect the human cost of inadequate road safety enforcement and the financial vulnerability of accident victims in a system where insurance coverage has historically been limited.

The integration with CDC’s Motor Insurance Repository brings a level of transparency to Punjab’s transport compliance framework that did not previously exist. Insurance status can be verified instantly against a central database, removing the ambiguity of paper-based verification and making it significantly harder for non-compliant operators to slip through the system.

What Comes Next

SECP is pursuing complementary reforms that will strengthen the foundation this integration has established. These include introducing a no-fault insurance regime, allowing accident victims to claim compensation without first establishing legal liability, and amendments to the Motor Vehicles Act of 1939 to bring the legal framework in line with modern enforcement realities.

The SECP is also targeting an increase in insurance penetration from the current 0.8% of GDP to 1.5%, reflecting a broader ambition to make insurance a genuine feature of Pakistan’s road ecosystem rather than a compliance formality.

For Punjab specifically, the immediate next step is expanding the coverage and consistency of the new system across all public transport operators in the province, ensuring that the digital framework delivers on its promise uniformly rather than unevenly across different routes and regions.