Developed countries are receiving the assistance of friendly system of insurance but we are still living with the conventional approach. Pakistan Insurance Industry Contribution to GDP is 0.23%. Luxembourg has highest contribution to GDP, which is 54.42%. In 2006 Total Premium of insurance industry of Pakistan was $ 949 million, while India holds $ 43,032 million. Premium of World Insurance Market has increased by 75% in the last decade, but growth of Pakistan insurance industry for the same period is more than 900%. Economists believe, insurance is a vital tool for the economic stability of the country, but unfortunately this industry overlooked from its foundation. Comparing with other financial sector industries such as banking, mutual funds and securities etc, insurance industry on the whole is far behind. People still customarily faith that "It is something haram", but what really happens in it and how does it works, majority is unaware. This is the route cause of backwardness of the insurance industry . It says "Customer is the King" but if customers are not aware, then how can we expect from them that he will purchase insurance policy. Unluckily in the past, Insurance association of Pakistan (IAP) and Insurance Companies did not take steps to highlight its importance and promotion of the insurance mechanism and also to remove the misconceptions in the minds of people. In year 1997, Asian Development Bank (ADB) provides $250 million, under the "Capital Market Development Program" for the repeal and renewal of Insurance Act 1938, which later on result in promulgation of Insurance Ordinance 2000. Keeping in view the need of the industry, "Hailey College of Banking and Finance" with the mutual collaboration of Insurance association of Pakistan (IAP) started insurance educational program at graduation and masters level in 2005, with an objective to develop the insurance professionals, which is considered to be a milestone for the future of this industry. Analysts consider it, an asset generation factory of Insurance Industry . Now administration of Hailey College of Banking and Finance and IAP is planning to start CII (Chartered Insurer) in the college, which will also contribute a lot such as. "Contribution in the form of premium from the insured people is a common pool of fund to help those peoples (insured) who suffers financially, if faces insured loss". In this dynamic world, where situation take no time to change, a businessman is very fearful. Sole businessman can help himself through contribution of a small sum. He can easily purchase a piece of mind and can run his business smoothly. Developed countries are getting the benefit of friendly mechanism of insurance but we are still living with the traditional approach. It is bad luck of sole businessman and Insurance Industry that almost all the policies that are offered by the insurance companies are not designed, keeping in view the need of a businessman alone. While talking to a senior representative of an insurance company, he says "Small and medium business units, Not a good choice to sale an insurance policy". Now the question arises that this single statement can satisfy the sole businessman and entire Insurance Industry , Of course "NOT". Now all the companies in this marathon must feel that time has changed, education level of Pakistan is increasing, living standard of people has improved a lot. Situation of our country has improved to a great extent, in respect of financial sector. Share of Insurance Industry in the world insurance market was 0.008% in 2002. It increases and reached at 0.03% in 2006. It increases a lot from last few years, at the end of year 2002 it was 0.008%. This improvement in world market share is showing an increasing trend of insurance industry . Major share of Pakistan insurance industry goes to Non-Life insurance, which holds 61.12% of Premium of the Whole Industry. It shows that Pakistan is also among one of the majority of Islamic countries in which Non-Life insurance holds major share. The main cause of such a gap between Life Insurance and Non-Life Insurance is the traditional belief that insurance is Haram. If we discuss the region of South Asia, situation is also not encouraging. Total Premium of insurance industry of SAARC is $ 45200 million, which hold 1.22% share of the whole world. Premium to GDP ratio of Pakistan is 0.23% that shows insurance industry is not contributing a lot to GDP. It shows worst situation of Insurance Industry of Pakistan. Comparing with India who's Insurance Premium to GDP Ratio is 1.124% Developed countries are very ahead in respect of Insurance, USA, Japan, United Kingdom, France and Germany collectively hold 2/3rd of the whole insurance market of the World. Above all discussion, clearly show where our insurance industry stands. We must not lay all the responsibilities and burden on the shoulders of Insurance Association of Pakistan (IAP), but there is awful need of a society with an objective to spread the concept of insurance among the general public specially the people who have misconceptions in their mind regarding its status as haram. This misconception can not be removed without the support of insurance companies. If Insurance Association of Pakistan (IAP) and insurance companies take corrective measures, there is no way that our insurance industry will reach at a point which is called "Destination". Top Five Countries Premium To GDP Ratio, year 2006 (Writer is student MBA (Insurance and Risk Management), Hailey College of Banking and Finance, Punjab University Lahore. Email: mesumshah@yahoo.com)