The Securities and Exchange Commission of Pakistan (SECP) has approved the draft Insurance Bill, 2017, which has been sent to the Ministry of Finance for its onward submission to the Ministry of Commerce to start the necessary legislative process.
The Bill has been formulated to institute significant reforms in the insurance regulatory framework to bring it on a par with the international standards and to ensure the development of a financially sound insurance sector where interests of policyholders are protected, reported the Associated Press of Pakistan citing a statement issued by the Commission.
The salient proposed reforms include the introduction of dedicated micro-insurers, the introduction of a risk-based supervision framework (risk-based capital and risk-based solvency margin), regulation of takaful and retakaful, regulation of local and foreign reinsurance business for enhancement of local capacity, regulation of reinsurance brokers, flexibility in introduction of new intermediaries, introduction of web aggregators and insurance repositories, the requirement of an "appointed actuary" and product filing in the non-life sector.
The proposed Bill also aims to strengthen the 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 a phased shift towards a risk-based supervision regime and address regulatory gaps in the existing law.
The proposed reforms were presented to the Finance Minister in October 2016, and on his advice, the concept note on proposed significant reforms was shared with industry stakeholders through consultation sessions conducted in three major cities of Pakistan. Thereafter, the proposed framework was transformed in the form of draft Insurance Bill, which was issued for public feedback on 28 December 2016. Subsequent consultation sessions were also conducted to discuss significant reforms proposed in the draft Insurance Bill.