ISLAMABAD – In a significant move to uphold regulatory integrity and protect consumer interests, the Securities and Exchange Commission of Pakistan (SECP) has directed The United Insurance Company of Pakistan Limited to cease its guarantee business operations.
The order, issued on May 20, 2025, was made under Section 60 of the Insurance Ordinance, 2000.
The action follows a series of regulatory violations by United Insurance, including its refusal to honour encashment requests of called guarantees. According to an SECP press release, the company accumulated unfulfilled guarantees amounting to Rs. 2.2 billion by December 2023. Additional complaints totaling Rs. 822 million were filed during 2024 and 2025, highlighting systemic non-compliance by United Insurance.
Before issuing the final directive, SECP served a show-cause notice to United Insurance. In an attempt to block the proceedings, the company obtained a stay order from the Lahore High Court on February 21, 2024. However, the court dismissed the petition on April 10, 2025, deeming it baseless and lacking merit.
The regulatory body noted that United Insurance failed to comply with multiple opportunities to justify its conduct and demonstrate adherence to the required standards for conducting guarantee business. Furthermore, SECP revealed that the company made a materially false statement during regulatory hearings regarding the settlement of a guarantee worth approximately Rs. 1 billion—an offense now subject to separate legal action by SECP.
In its directive, SECP has strictly prohibited United Insurance from issuing any new guarantees or rolling over existing ones. The company must, however, honour all previously issued guarantees as they mature. This decisive step aims to protect policyholders, guarantee beneficiaries, and to sustain public confidence in the insurance sector.
Moreover, United Insurance may apply for cancellation or modification of the directive, but only upon demonstrating full compliance with regulatory frameworks, including the provision of adequate collateral and resolution of pending guarantee claims.
The SECP emphasized its ongoing commitment to consumer protection and regulatory enforcement. Since July 1, 2024, it has handled over 3,000 complaints and facilitated recoveries worth Rs. 1,300 million in the insurance sector. The proactive stance by SECP is expected to enhance compliance, promote transparency, and rebuild public trust in insurance institutions.