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Dec 2022

Pakistan: Regulator to develop risk-based capital regime for insurance sector

Source: Asia Insurance Review | Jul 2022

The Securities & Exchange Commission of Pakistan (SECP) has formed a technical working group to develop a preliminary model for a risk-based capital regime for the insurance sector. This work is to be completed by 30 June 2022.
The SECP said, “The graduation of the insurance sector in Pakistan from factor-based capital requirements to risk-based capital requirements will help increase the resilience of the insurance sector towards risks faced by it and improve its compliance with the international standards.”
The regulatory reforms aimed to be introduced through Insurance Ordinance (Amendment) Bill, 2021 are expected to bring a shift in insurance sector regulation by creating a conducive environment for market development, alignment of the regulatory framework with international insurance supervisory standards and strengthening the supervisory powers of SECP.
The draft regulatory framework for registration of digital-only insurers and dedicated microinsurers is expected to be finalised by end FY2022. It will lower the barriers to entry and enable small and tech-based entities to enter the insurance market, thereby increasing insurance penetration in underserved markets.
A road map is devised for the development of risk-based capital regime and implementation of International Financial Reporting Standard 17 (Insurance Contracts). To ensure a smooth transition to the adoption of IFRS17, the SECP has taken a phased manner approach covering gap analysis and the financial impact assessment which will be followed by system design and methodology and parallel run. A 

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