The Securities and Exchange Commission of Pakistan (SECP) has proposed amendments to the primary insurance law i.e. Insurance Ordinance 2000. The draft law has been placed on the regulator’s website for stakeholder and public consultation.
The Draft Bill will address the regulatory gaps in existing law and provide a conducive regulatory environment to encourage market development.
These changes will facilitate the use of technology, provide ease of doing business, and address entity-specific and systemic risks by shifting towards Risk-Based Supervision (RBS) and Risk-Based Capital (RBC) Regime.
The amendments in law will also strengthen the regulatory framework and ensure its alignment with the Insurance Core Principles (ICP) of the International Association of Insurance Supervisors (IAIS).
The significant reforms proposed in the draft bill include the introduction of dedicated micro-insurers, provisions for regulation of takaful and re-takaful, regulation of local and foreign reinsurance business for enhancement of local capacity, regulation of reinsurance brokers, flexibility for the introduction of new intermediaries, insurance repository and insurance self-network platform, provisions for regulation of index-based insurance and InsurTech.
Provisions for the introduction of the RBS & RBC regime, establishment, and operation of a guarantee fund for insolvency of insurers have been included to strengthen the regulatory framework and align the law with core principles of IAIS and address systemic risk. The amended law will also assist in enhancing compliance with AML/CFT frameworks.
The changes include the requirement of appointed actuary and product filing of personal lines for non-life insurance, the appointment of internal actuary for life insurers, and enhancement of market conduct provisions. The regulatory powers of the Commission for regulation and supervision of insurance companies and intermediaries have also been streamlined in the Draft Bill.