Pakistan's insurance regulator, the Securities and Exchange Commission of Pakistan (SECP), has issued the draft Actuarial Valuation Rules, 2025, for public consultation.
The proposed framework applies to both life and non-life insurance and takaful businesses, aligning with the objectives of the SECP's five-year strategic plan, named ‘Journey to an Insured Pakistan’.
The draft rules establish a framework for valuation of insurance contract assets and liabilities, and were developed in line with the International Association of Insurance Supervisors' (IAIS) Core Principles and the latest global actuarial practices. The rules also incorporate the adoption of risk-based capital and supervisory regimes.
The aim is to standardise and align actuarial valuation practices with international markets, supporting the SECP's objectives of digitisation, transparency and innovation.
These rules also introduce and expand upon contemporary and market-consistent reserving practices. Provisions include gross premium valuation for long-term insurance and takaful businesses, updated methodologies for premium and claims reserving for short-term insurance and takaful businesses, the adoption of principle-based and consistent actuarial assumptions, improved data quality practices and enhanced standardisation of quality submissions.
The adoption of updated actuarial valuation practices will promote the long-term financial viability and sustainability of the industry, and help meet and safeguard policyholders’ interests and expectations, enhance shareholders' understanding and management of insurance businesses and improve the quality of reviews for statutory reporting.
“Developing a vibrant and sustainable insurance sector is a key focus of our five-year strategic plan,” said the SECP chairperson.
“We are guided by a commitment to core principles that ensure a level playing field: championing competition and market openness, removing barriers such as legal monopolies, privatisation and ensuring our regulatory framework meets the highest international standards.”
The draft rules can be viewed here.