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SECP to Introduce a Regime to Register Microinsurance and Digital Insurance Companies

The Securities and Exchange Commission of Pakistan (SECP) has decided to introduce a regime for the registration of entities desirous to transact insurance on a digital-only basis and small ticket size insurance, i.e., microinsurance.

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According to a paper of the SECP issued on Tuesday, the objective is to promote financial technology and innovation, to leverage cost-effectiveness and accessibility, increasing competition, widening product range, improve customer experience, and enhancing financial inclusion.


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So far, only 27 online products have been registered with SECP by the life insurance companies under the “file and use” prescribed under Section 13 of the Insurance Ordinance, 2000.

Also, the use of technology in other areas of insurance is the untapped area, such as tech-based innovative products, automated underwriting, policy administration, claims processing, and payments, among others.

To proceed in respect of the introduction of the registration regime for microinsurer and digital-only insurers, the draft amendments to the Insurance Rules, 2017, are made for review and feedback of all relevant stakeholders to be received within thirty days of issue of this paper.

The proposed Registration Regime for Digital-only Insurer and Dedicated Microinsurer is expected to enable the small entities with vision and plan to innovate and serve the insurance market to obtain registration with the SECP while complying with lenient regulatory requirements in terms of minimum paid-up capital and solvency requirement.

In line with the principle of proportionality, lenient capital and solvency requirement have been proposed for registration of dedicated microinsurer and digital-only insurers, SECP stated.


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The entities desirous to transact microinsurance business dedicatedly may do as after obtaining registration with the SECP as microinsurer while complying with the (proposed) applicable regulatory requirements stipulated in the draft amendments annexed to this paper.

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However, the existing insurance companies may continue to transact the microinsurance business in a current manner. In line with the principle of proportionality, lenient capital and solvency requirement have been proposed for the registration of dedicated microinsurers, as illustrated in the previous section.

The dedicated microinsurer so registered will comply with the requirements for the conduct of microinsurance business set out in the SEC (Microinsurance) Rules, 2014, including but not limited to disclosure, product features, and filing, claim handling and processing, complaint handling, code of conduct, and consumer protection standards.

Registration as Digital-only Insurer

The lenient registration requirements, i.e., relaxed paid-up capital and solvency requirements, have been proposed for the entities desirous to transact insurance through digital mode only to enable the innovative and visionary fintech entities to enter the insurance market.

The digital-only insurer will be required to demonstrate capability for conducting business through digital modes and comply with business conduct requirements proposed in the draft amendments, the key contents of which are stipulated.


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After registration, the digital-only insurer and microinsurer may obtain authorization to conduct takaful operations on a dedicated or window basis while complying with the applicable provisions of the Takaful Rules, 2012. All regulatory requirements as applicable to the full-fledged insurers registered under Section 6 of the Insurance Ordinance, 2000, will apply to the dedicated microinsurers and digital-only insurers, including inter alia Insurance Rules, 2017, Code of Corporate Securities and Exchange Commission of Pakistan Insurance Division Position Paper – Registration Regime for Digital-only Insurer and Dedicated Microinsurer, Page 7 of 7 Governance for Insurance Companies, 2016, Insurance Companies (Sound and Prudent Management) Regulations, 2012, Takaful Rules, 2012, SEC Cybersecurity Guidelines, 2020, SEC (IBNR) Guidelines, 2016, SECP added.

Solvency Requirements:

For Life microinsurer and Life Digital-only Insurer, Rupees seventy-five million is proposed as the required minimum amount to be maintained as a surplus of admissible assets over liabilities in shareholders fund of life microinsurer and life digital-only insurer. For full-fledged insurers registered under Section 6 of the Insurance Ordinance, 2000, this amount is Rupees one hundred and sixty-five million only.

The solvency margin requirement for statutory funds of life insurers is formula-based, as given in Annexure III of Insurance Rules, 2017, and will be automatically rationalized in line with the business volume and operations of the entity.


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For Non-life Microinsurer and Non-life Digital-only Insurer Under the insurance regulatory framework, the solvency requirement for a non-life insurer is higher of a fixed amount of fifty million, and formula-based amount, calculated in accordance with Section 36(3) of the Insurance Ordinance, 2000, read with Rule 15 (2) & (3). Rupees fifty million is proposed as a fixed solvency margin requirement for non-life Microinsurer and Non-life Digital-only Insurer.

For fullfledged non-life insurers registered under Section 6 of the Insurance Ordinance, 2000, this amount is Rupees one hundred and fifty million only. The formula-based amount will be automatically rationalized in line with the business volume and operations of the entity.

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