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A Brief History

The Securities and Exchange Commission of Pakistan has been regulating the Insurance industry, since January 2001 after it took over from the Controller of Insurance operating under Ministry of Commerce, Government of Pakistan. The SECP regulates and monitors the Insurance Sector in the country through powers vested in the Insurance Ordinance, 2000 and the Companies Ordinance, 1984.

Role of SECP in Insurance Sector

The SECP, being the apex regulator of the insurance industry, has a strategic priority and commitment to strengthen and maintain an effective regulatory environment in which insurance and takaful business can flourish and prosper. To strengthen SECP’s role as an effective facilitator for sound development of the insurance and takaful industry and to achieve the underlying objective of raising the insurance penetration level, the following key areas have been in focus of SECP’s efforts:

  • Protection of the interest of insurance policyholders.
  • Amendments in the regulatory framework to strengthen SECP’s role as an apex insurance regulator.
  • Enhancement of regulatory framework for Takaful Insurance.
  • Availability of insurance protection to less privileged segment of the society (Microinsurance).
  • Insurance Awareness Programs.
  • Enhanced public image of the insurance industry.

Insurance Division has been divided into two main departments:

  • Policy, Regulation and Development Department
  • Supervision Department
Policy, Regulation and Development Department

Responsible for policy reform, actuarial work, re-insurance treaty, facultative reinsurance approval, NOC for purchasing insurance policy from abroad, registration and de-registration.

Supervision Department
Responsible for centralized function of On-site Inspection, Off-site Surveillance and Enforcement.

Functional Profile
The functional profile of wings is as follows:
Policy, Regulation and Development Department has following wings:

Policy and Registration Wing
The Policy and Registration Wing is responsible for review of the regulatory framework of the Insurance Sector, collection of statistical data, research on regulatory issues, development of new rules/regulations and approval of Insurance products. It is also be responsible for registration & licensing of the Insurance Companies, Brokers and Surveyors.

Re-insurance, Litigation and Advisory Wing
The Re-insurance, Litigation and Advisory Wing is responsible for reviewing the Re-insurance Treaties, issuing Facultative re-insurance and related approvals. Further this wing assists the division in prosecution, litigation and advisory on routine legal matters.

Supervision Department has following wings:

On-Site Inspection Wing
The On Site Inspection wing is responsible for centralized on-site inspection of the Insurance Companies supervised by the Insurance Division. Inspection wing conducts full scope inspections of the insurers on regular basis according to the inspection plan chalked out for the insurance companies regulated by the Division including Compliance Visits.

Off-Site Surveillance Wing
The Off-site surveillance wing is responsible for centralized off-site surveillance of the registered Insurance Companies & Brokers supervised by the Insurance Division. It basically monitors the compliance with the Companies Ordinance-1984, Insurance Ordinance-2000, SEC Insurance Rules2002, Federal Gov. Insurance Rules -2002, Takaful Rules-2005, Companies (Issue of Capital) Rules1996, Companies Share Capital (Variation in Rights & Privileges) Rules-2000 and International Accounting and Financial Reporting Standards.

Enforcement Wing
The Enforcement wing is responsible for the centralized appropriate enforcement function of Insurance and Takaful Companies.

Key Achievements and Future Plans

Key Achievements
In its quest to meet its primary objectives of protecting the interests of policyholders and facilitating orderly development of the insurance industry, including takaful segment, the Insurance Division focused in various areas, the brief summary of which is given below.

  • Diagnostic Study on Microinsurance Demand and Supply
  • Takaful Rules, 2012
  • Introduction of new solvency regime
  • On-line Insurance Companies Return Submission System (ICRS)
  • Insurance industry reform committee
  • Formation of approved panel of auditors
  • Guidebooks on incorporation and registration
  • Insurance Companies (Sound and Prudent) Management Regulations, 2012
  • Directions for insurance companies to combat money laundering
  • Development of crop and livestock insurance

Future Plans
The Insurance Division is eagerly looking forward to complete the following tasks in the near future:

  • Accounting regulations and formats for published financial statements and regulatory returns for conventional life and non-life insurers
  • Accounting regulations and formats for published financial statements and regulatory returns for general and family takaful entities
  • Shariah Advisory Board
  • Unit–linked regulations
  • War risk insurance scheme
  • Alternative distribution channels
  • Review of the Insurance Ordinance 2000
  • Rules for insurance surveyors
  • Regulations for Third Party Administrators (TPA) for health insurance
  • Microinsurance development
  • Development of crop and livestock insurance
  • Development of health insurance
  • Review and development of insurance and reinsurance broking regulations
  • Development of catastrophe insurance schemes
  • Repository for life insurance policies
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