The draft regulatory framework for registration of digital-only insurers and dedicated micro-insurers is expected to be finalized by the end of 2022-23 to lower the barriers to entry and enable small and tech-based entities to enter the insurance market.
The SECP report on the insurance sector revealed that the regulatory reforms aimed to be introduced through Insurance Ordinance (Amendment) Bill, 2021 are expected to bring a paradigm 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.
Similarly, the proposed amendment to Unit Linked Product and Fund Rules, 2015, will improve the market conduct and ensure the protection of policyholders’ interests.
The regulation of unit-linked products is critical as the investment risk is borne by the policyholder in unit-linked insurance products. Promoting digitalization and encouraging innovation in the insurance sector will continue to be the key area of focus of SECP encompassing the following main initiatives:
With regards to IFRS 17 implementation, Phase – II is to be completed by Insurance companies and takaful operators by December 2022. Subsequently, the phase -III of IFRS 17 implementation i.e. System Design and Methodology would be initiated after due consultation with the stakeholders. It is expected that the implementation of IFRS 17 in Pakistan will make the financial statements of insurers more useful as well as ensuring consistency in insurance accounting practices across jurisdictions.
The role of Insurance intermediaries in the value chain of non-life insurance needs no emphasis. Insurance intermediaries facilitate the placement and purchase of insurance and provide services to insurance companies and consumers that complement the insurance placement process. With the objective of strengthening the insurance regulatory framework and consumer protection.
SECP will examine and deliberate upon the existing framework for the conduct of Insurance intermediaries mainly: brokers, agents and surveyors and make its recommendations, in the context of evolving challenges and opportunities in the area, SECP added.