SECP seeks powers through amendments in insurance laws

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has sought amendments in the Insurance Ordinance to get powers of civil prosecution and taking punitive actions in line with the principles of the International Association of Insurance Supervisors (IAIS), sources said.
The commission is in the process of reviewing Insurance Ordinance and Rules after which it would recommend the amendments to the finance ministry, the sources told The News.
The SECP, taking help of an international expert, will thoroughly review the Ordinance and Rules.
The IAIS principles, standards and guidance papers represent global best practices. The SECP has observed that there is a clear gap between the current insurance laws in Pakistan and IAIS principles, making it imperative to assess and implement the globally-accepted principles and standards across the industry.
“As a member of IAIS, the SECP is committed to bringing the local insurance industry at par with the international best practices and standards in a phased manner,” an official said.
According to the SECP, the Insurance Ordinance, promulgated 10 years back, has a number of laudable reforms, but a number of elements that are vital to a modern, risk-based supervisory regime are found missing. It also lacks the required depth prevalent in the laws of other jurisdictions, it added.In addition, the SECP has identified certain anomalies and discrepancies between the Insurance Ordinance and the two sets of Insurance Rules, 2002, that need to be removed.
According to the commission, the law is also silent on provisions like anti-money laundering, Banc-assurance and micro-insurance.
The Commission has started consultations with all stakeholders, including the industry, and studying international models to bring in a comprehensive regulatory framework for micro-insurance.
Micro-insurance refers to insurance characterised by low premium and low coverage limits.
The framework for micro-insurance is likely to be in place by the end of this year.
“In order to increase the micro-insurance penetration, a vigorous awareness campaign and training programs for micro-insurance managers and policy markers is also required,” the SECP noted.
In order to prepare the insurance sector to face the impact of globalisation and shrinking margins and also to avoid mal-administration, the insurance companies must be run by competent executives with adequate know-how.
Keeping in view the importance and urgency of the matter, the SECP has developed the ‘fit and proper’ criteria for the insurance sector in line with the Ordinance and in consultation with the Insurance Association of Pakistan.