Pre-requisites

  • Minimum Paid up Capital requirement [Life Insurer & Family Takaful: Rs.700 million and Non-Life & General Takaful: Rs.500 million];
  • Maintain a Statutory Deposit @ 10 percent of the Paid up Capital with State Bank of Pakistan;
  • Compliance with the Solvency Requirements pursuant to the provisions of the Insurance Ordinance 2000 and rules made thereunder;
  • Ability to meet and continue to meet its liabilities;
  • Ability to meet and continue to meet the criteria pursuant to The Insurance Companies [Sound & Prudent Management] Regulations 2012;
  • Evidence of appointment of a statutory auditor as approved by the Commission;
  • Evidence of appointment of an actuary, if the applicant proposes to carry on life insurance business;
  • The applicant is, and is likely to continue to be able to comply with such other provisions of the Insurance Ordinance 2000, as are applicable to it.

Application

Having obtained Certificate of Incorporation, the sponsors/promoters would be required to submit an application to the Insurance Division of SECP for grant of Registration Certificate under Section 6 of the Insurance Ordinance 2000, to underwrite insurance business in the country, which will specify:

  1. The name of the insurer;
  2. The address of the principal office and in case of an insurer incorporated outside Pakistan, the address of the principal office outside Pakistan;
  3. The name, address and occupation of the directors of the insurer and particulars of other directorships held by them;
  4. The nature of and all considerations and other benefits passing under, any agreement between the applicant and any director;
  5. Names and addresses of and particulars of any business carried on by, each person holding an interest of ten percent or more in the issued share capital of the insurer;
  6. A statement of the class or classes of insurance business to be carried on by the insurer and the magnitude of risk to be covered within each class.
  7. Where registration is sought for life insurance, a statement of the statutory funds to be established by the insurer;
  8. The name and address of the auditor of the insurer and a statement by the auditor that he consents to act as auditor of the insurer (auditors should be appointed out of the list of approved auditors under Section 48(1));
  9. Where registration is being sought for life insurance, the name and address of the appointed actuary of the insurer and a statement by the appointed actuary that he consents to act as appointed actuary of the insurer. Qualifications of actuaries have been prescribed under Rule 3 of the Securities and Exchange Commission (Insurance) Rules 2002;
  10. The name and address of the bank or banks which the insurer uses or proposes to use as its principal banker or bankers;
  11. The name and address of any investment custodian used or proposed to be used by the insurer;
  12. Information on the company’s reporting arrangements to its own management;
  13. Information on the company’s reporting arrangement to the SECP;
  14. A statement of the proposed reinsurance arrangements of the insurer and a description on how and to what extent the expected contracts are to be insured;
  15. Particulars of any agreement other than a reinsurance agreement, which the applicant has with any person or body corporate carrying on insurance business
  16. Particulars of the measures proposed by the applicant to ensure compliance with the requirements laid down in section 11 of the Insurance Ordinance 2000 and The Insurance Companies {Sound & Prudent Management} Regulations 2012;
  17. Particulars of the investment policy of the insurer;
  18. Details of the affiliation/outsourcing contracts;
  19. prospective staff plan (even though all positions might not be filled immediately);
  20. Planned commissions, benefits and incentives for agents and brokers;
  21. Methods of distribution and plans for training sales personnel; and
  22. Types of products and marketing methods.

Supporting Documentation

For the purpose of s.S 6(6) of the Insurance Ordinance 2000, the following documentation shall be submitted along with any application for registration, namely:

  • Certified True Copy of the Certificate of Incorporation attested by the concerned CRO;
  • Certified True Copy of the Memorandum and Articles of Association attested by the concerned CRO or other document by which the applicant is constituted;
  • Auditors Certificate in respect of paid up capital of the company;
  • A statement not more than seven days previous to the date of application from State Bank of Pakistan reflecting the statutory deposit made under Section 29 of the Insurance Ordinance 2000;
  • Copies of reinsurance treaty arrangement under Section 41 of the Insurance Ordinance 2000; reinsurance treaty arrangements with only “A” rated reinsurers are acceptable;
  • Form 29 under the Companies Ordinance 1984, in case of change of directorship, after incorporation of an insurance company;
  • Copies of Accounts, Statements and Reports laid before the shareholders of the applicant at the last 5 annual general meetings of the shareholders or, if less than 5 annual general meetings of the shareholders of the applicant have been held, copies of the accounts, statements and reports laid before the annual general meetings of shareholders which have been held;
  • Marketing literature and/or internal training material for sales personnel to ensure they contain no misrepresentations or abuses;
  • In respect of restricted classes of non-life insurance business, a certified copy of the published prospectus, if any, ad of the standard policy forms of the insurer and statement of the assured rates, advantages, terms and conditions to be offered in connection with insurance policies;
  • To carry on life insurance business, the following information shall be submitted:
  1. a statement of the rates, advantages, terms and conditions of the life insurance policies proposed to be offered by the applicant, including without limitation where the policy acquires a surrender value, the basis on which the surrender value is determined, and including without limitation in case of investment-linked policies a description of:
    • The investment to which the policy is linked;
    • The basis on which the benefits payable under the policy are determined;
    • The frequency with which and basis by which the unit values are determined, and the values attributed to units at the time of purchase and sale;
    • The basis which values are attributed to units at the time of and for the purpose of purchase and sale;
    • The basis on which expenses attributed to the policy are determined; and
    • The basis on which charges for mortality attributed to the policy are determined;
  2. a business plan setting out the expected premium income, expenses and results of the applicant for a period of not less than ten years from the date at which authorization is proposed to be obtained;
  • a copy of any written, electronic or other material proposed to be issued by the applicant for mass communication or for communication with a policyholder or prospective policyholder, in respect of life insurance policies proposed to be offered by the applicant;
  1. a statement by the appointed actuary that the terms and conditions of the life insurance contracts proposed to be entered into are sound and workable; and
  2. a statement by the appointed actuary that the business plan has been prepared according to principles which appear to him to be reasonable and sound.

An applicant is required to communicate in writing, any change specified in the application or in the matters contained in a document required, within 14 days after the occurrence of the change, signed by any two authorized persons specifying particulars of the change.

SECP may register insurer upon satisfaction

The SECP shall scrutinize the application and the documents enclosed, in light of the provisions of the Insurance Ordinance 2000 and Rules made thereunder as well as policy decision(s) made in this regard.

Important

The SECP may at any time require a registered insurer or any insurer deemed under the Insurance Ordinance 2000 to be registered to comply with such conditions as may deem fit.

Application for Grant of Authorization under the Takaful Rules

After completion of procedures required under the provisions of the Insurance Ordinance 2000, companies aspiring to transact full-fledge takaful operations or conventional insurers intending to undertake window takaful operations, must comply with the pre-requisites under the relevant Takaful Rules.

Scope of the Certificate of Registration

Once the Certificate of Registration is granted to an insurer for conducting insurance business, the life insurer is allowed to underwrite all classes of life insurance business (Ordinary Life, Capital Redemption, Pension Fund, Accident and Health) and a non-life insurer is allowed to underwrite all classes of non-life insurance business (Fire & Property Damage, Marine Aviation & Transport, Motor Third Party Compulsory, Liability, Workers’ Compensation, Credit & Suretyship, Accident & Health, Agriculture Insurance including crop insurance, Miscellaneous) subject to the extent it is allowed in the Certificate of Registration.

Application for Grant of Certificate of Commencement of Business

Upon registration of the company under the Insurance Ordinance 2000, the insurer is required to obtain a Certificate of Commencement of Business from the concerned CRO under the provisions of the Companies Ordinance, 1984 to start its underwriting business operations.