According to the proposed Insurance Bill, 2016 issued by the Securities and Exchange Commission of Pakistan (SECP) here on Thursday, no person other than a public company formed and registered under the Companies Ordinance, 1984 and a body corporate shall be eligible to undertake microinsurance business in Pakistan. A microinsurer can offer both life and non-life microinsurance services as may be prescribed by the Commission.
The proposed Insurance Bill, 2016 has introduced separate provisions for insurers registered exclusively to undertake microinsurance business. No person other than a public company formed and registered under the Companies Ordinance, 1984, and a body corporate, as defined in the Act, shall be eligible to undertake microinsurance business in Pakistan, says the proposed Insurance Bill, 2016.
A microinsurer registered to carry on microinsurance business only in one province of Pakistan, shall have a paid-up capital of not less than fifty million rupees or such higher or lower amount as the Commission may specify in this behalf through notification in the official gazette. The proposed Insurance Bill, 2016 also explained in detail the authorisation of foreign reinsurers to carry on reinsurance business in Pakistan. An eligible person, desirous of undertaking reinsurance business in Pakistan shall obtain from the Commission a certificate of authorisation to carry on life reinsurance business, non-life reinsurance business or composite reinsurance business.
Meanwhile, the SECP announced that the Commission on Tuesday (December 27, 2016) approved the draft of the proposed Insurance Bill, 2016 for eliciting public comments for the purpose of stakeholders' consultation. Earlier, Finance Minister Ishaq Dar was briefed by the SECP about the changes required in the insurance regulatory framework. The finance minister had advised to start nation-wide consultation with stakeholders on the proposed insurance regulatory framework. Accordingly, in October 2016, the SECP held consultative roundtables in the cities of Karachi, Islamabad and Lahore with the insurance sector stakeholders. The proposed reforms were shared with the stakeholders in the form of a comprehensive concept paper. The roundtables were attended by insurance companies, insurance brokers, associations of insurance surveyors, Pakistan Societies of Actuaries and the Institute of Chartered Accountants of Pakistan. The roundtables were very well received, as almost 80 officials of the aforementioned companies/institutions were present and they shared their views in respect of the proposed framework both during the roundtables and subsequently in the form of written comments.
The draft bill aims to provide conducive regulatory environment to encourage market development, strengthen regulatory framework to ensure alignment with the Insurance Core Principles (ICP) of the International Association of Insurance Supervisors (IAIS), address entity specific and systemic risks by phased shift towards Risk Based Supervision (RBS) and Risk Based Capital (RBC) Regime and to address the regulatory gaps in existing law. The significant reforms suggested include the introduction of dedicated microinsurers, provisions for regulation of Takaful and re-Takaful, regulation of local and foreign reinsurance business for enhancement of local capacity, regulation of reinsurance brokers, flexibility for introduction of new intermediaries, introduction of concept of web aggregators, insurance repository, require insurers to develop and offer certain insurance products, provision for introduction of industry wide guarantee fund to address systemic risk, requirement of "appointed actuary" and product filing for non-life insurance. This shift to the risk based supervision (RBS) and risk based capital (RBC) will improve image of the insurance industry of Pakistan internationally, the SECP said.
For eliciting public comments, the draft of the Insurance Bill, 2016 has been placed on the official website of the SECP and is accessible at https://www.secp.gov.pk /laws/draft-for-discussion/. Public comments received within a period of thirty days shall be considered before finalising the new insurance law, the SECP added.