Insurance laws Pakistan
Pakistan's insurance sector operates under a comprehensive legal and regulatory framework designed to ensure financial stability, consumer protection, and market transparency.
📜 Key Legislation
Insurance Ordinance, 2000:This foundational law establishes the legal grounds for conducting insurance activities in Pakistan. It regulates relations associated with coordinating and monitoring insurance activities by an authorized state body, granting licenses for conducting insurance activities, and protecting the rights of insured persons
Insurance Rules, 2017:These rules, issued under the Insurance Ordinance, provide detailed provisions on various aspects of insurance operations, including licensing, solvency requirements, and corporate governance Insurance Accounting Regulations, 2017:These regulations set out the accounting standards and practices for insurance companies, ensuring transparency and consistency in financial reporting
General Takaful Accounting Regulations, 2019: These regulations apply to Islamic insurance (Takaful) companies, outlining the accounting principles specific to Takaful operations
🏛️ Regulatory Authority
Securities and Exchange Commission of Pakistan (SECP) The SECP is the primary regulatory body overseeing the insurance industry in Pakistan. It is responsible for licensing insurers, setting solvency standards, and ensuring compliance with insurance laws and regulation.
💰 Capital Requirement
The SECP has established minimum paid-up capital requirements for insurance companies to ensure financial stabiliy:
*Life Insurers: The minimum paid-up capital requirement is Rs. 1,000 million for 2025, with a phased increase to Rs. 3,000 million for new registratios.
*Non-Life Insurers: The minimum paid-up capital requirement is Rs. 800 million for 2025, with a phased increase to Rs. 2,000 million for new registratios.
*Micro-Insurers: Life micro-insurers require a minimum paid-up capital of Rs. 150 million, while non-life micro-insurers require Rs. 80 millin.
*Digital-Only Insurers: Life digital-only insurers require a minimum paid-up capital of Rs. 250 million, and non-life digital-only insurers require Rs. 100 millin.
🛡️ Consumer Protections
*Disclosure Requirements: Insurers must provide clear and comprehensive information about policy terms, conditions, and exclusions, enabling consumers to make informed decisins.
*Claims Process: Established procedures are in place for filing and resolving claims, ensuring fair treatment of policyholders and timely settlement of clams.
*Dispute Resolution: Mechanisms are available for consumers to resolve disputes with insurers, promoting accountability and transparency in the insurance secor.
🔄 Recent Developments
Increased Capital Requirement: The SECP has increased the minimum paid-up capital requirements for insurance companies to strengthen the industry's financial stability and provide better protection for policyholers.
Digital Transformatio: The SECP is considering amending the Insurance Ordinance to establish a centralized insurance information bureau and enhance the regulatory governance framework, aiming to digitize the insurance setor.
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