Islamabad, January 12, 2024 – In a significant move aimed at rectifying an injustice, President Dr Arif Alvi has directed EFU Life Assurance Ltd to refund Rs 100,000 along with accrued profits to Zubaida Begum, a destitute woman who fell victim to the mis-selling of an insurance policy.
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Car Insurance Coverage in Pakistan at Just 3%: SECP Study Exposes Low Protection
Islamabad, August 1, 2023 – Car insurance coverage in Pakistan is shockingly low at a mere three percent, lagging far behind other major regional economies, according to a recent study conducted by the Securities and Exchange Commission of Pakistan (SECP).
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SECP issues list of approved CA firms for audit of insurance companies
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Tuesday issued a list of chartered accountant (CA) firms to conduct audit of insurance companies.
Following is the list of approved auditors to conduct audit of insurance, re-insurance and Takaful entities:
Category ‘A’ Firms:
01. A. F. Ferguson & Co. Chartered Accountants
02. Grant Thornton Anjum Rahman, Chartered Accountants
03. RSM Avais Hyder Liaquat Nauman, Chartered Accountants
04. BDO Ebrahim & Co., Chartered Accountants
05. EY Ford Rhodes, Chartered Accountants
06. Kreston Hyder Bhimji & Co., Chartered Accountants
07. Ilyas Saeed & Co., Chartered Accountants
08. KPMG Taseer hadi & Co., Chartered Accountants
09. Deloitte Yousuf Adil, Chartered Accountants
10. Rahman Sarfaraze Rahim Iqbal Rafiq, Chartered Accountants
11. Riaz Ahmed & Co., Chartered Accountants
12. Crow Hussain Chaudhury & Co., Chartered Accountants
Category ‘B’ Firms:
01. Baker Tilly Mehmood Idrees Qamar, Chartered Accountants
02. PKF F.R.A.N.T.S., Chartered Accountants
03. ShineWing Hameed Chaudhri & Co., Chartered Accountants
04. Muniff Ziauddin & Co., Chartered Accountants
05. Naveed Zafar Ashfaq Jaffery & Co., Chartered Accountants
06. Parker Randall – A.J.S., Chartered Accountants
07. S.M. Suhail & Co., Chartered Accountants
08. Amin Mudassar & Co., Chartered Accountants
09. Raenda Haroon Zakaria & Co., Chartered Accountants
10. Junaid Shoaib Asad, Chartered Accountants
11. Sarwars, Chartered Accountants
12. IECnet S.K.S.S.S., Chartered Accountants
13. H.A.M.D & Co., Chartered Accountants
The SECP said that audit firms in category A are eligible to conduct audit of all insurance, re-insurance and Takaful entities.
The audit firms in category B are eligible to conduct audit of all insurance, re-insurance and Takaful entities having gross written premium and total assets less than Rs 1 billion as per the financial statements in the immediate preceding year.
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SECP proposes amendments to insurance laws
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued draft bill to amend Insurance Ordinance 2000 with aim to bridge regulatory gaps in existing laws.
The draft law has been placed on SECP’s website for stakeholders and public consultation.
The draft bill will address the regulatory gaps in existing law and provide a conducive regulatory environment to encourage market development, the SECP said.
It will facilitate 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, it added.
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 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 introduction of new intermediaries, insurance repository and insurance self-network platform, provisions for regulation of index based insurance and InsurTech.
Provisions for introduction of RBS and RBC regime and 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 requirement of appointed actuary and product filing of personal lines for non-life insurance, 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.
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SECP forms body to develop RBC regime for insurance sector
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has constituted a working group of actuaries for the development of Risk Based Capital (RBC) Regime in Pakistan, said a statement on Wednesday.
The group members possess local as well as diversified international experience, it added.
An insurance company during the normal course of operations is not only exposed to risk in relation to insurance contracts that it underwrites, but also to a variety of other risks including market risk, liquidity risk, credit risk, operational risk etc.
Currently, compliance based Paid up Capital requirements and solvency requirements are levied on insurance companies.
The solvency regime does take into account to some extent, liquidity risk, credit risk, market risk, insurance risk etc. in calculation of solvency through admissibility of assets test, however, it does not quantify the levels of different risks borne by the insurers and therefore does not deliberate on the adequacy of capital keeping in view the risks undertaken.
Majority of international jurisdictions have already shifted or have commenced work to move towards RBC Regime for their insurance sector, few of these jurisdictions includes, Malaysia, China, India, Sri Lanka, Hong Kong, Turkey etc.
The SECP believes that for RBC to be implemented, the most important part would be quantification of the different risks faced by the insurance companies including their correlation/ interconnectedness in relation to the size and complexity of an insurer.
Introduction of RBC would provide true reflection of risks taken by insurance companies and would result in a more disciplined and financially resilient insurance sector in Pakistan.
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Insurance should be excluded from taxable services
KARACHI: The provincial tax authorities have been urged to exclude insurance from taxable services in order to provide incentives to insurance industry.
Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2020/2021 submitted to Sindh Revenue Board (SRB), said that each year, the life/health insurance companies have been approaching the SRB for an exemption, which is granted annually.
The last exemption for life insurance was valid only till June 30, 2019, whereas exemption for Corporate Health Insurance is valid till June 30, 2020 and has not yet been renewed.
The life and health insurance industry is based largely in the province of Sindh, where, the medical sector itself is exempt from SST.
Accordingly, subjecting the corporate health insurance to SST is making it uncompetitive, in Sindh, by adding on to the cost of health insurance.
Discussions are still ongoing with the Chairman SRB, and the Chairperson, Sindh Board of Investment, for exemption on the same.
The OICCI recommended that both, life insurance and health insurance, which do not fall within the scope of definition of service, should be permanently included in the list of exempted services by incorporating the same under table of exempted services specified in SRB’s notification no. SRB 3-4/7/2013 dated June 18, 2013, as per the following:
01. 9813.15: Life Insurance
02. 9813.16: Health insurance, rendered to both, individuals and corporates.
It may be mentioned that in Sindh these are taxable services.
A life insurance/ health policy is not a service. It is an underwriter’s promise to pay to the policy holder ‘in the future’, a specified sum of money, ‘either on occurrence of an identified event or on maturity of the policy’.
Such tax is highly discriminatory as entire health sector itself remains exempt and is not taxed.
This creates a deterrence for insurance business, as a person obtaining insurance would be paying additional 13 percent as well as cost of insurance, compared to directly obtaining health services, where he does not have to pay this tax.
This is clearly discriminatory and in violation of Article 25 of the Constitution of Pakistan.
The assertion that insurance is not a service, has also been legally upheld in USA and the Court there has ruled that life insurance policies are not “services”.
The KP Revenue Authority has exempted life insurance from the purview of taxable services. Uniformity across the country is essential for ease of doing business.
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One month free coverage to motor insurance policy holders
ISLAMABAD: Securities and Exchange Companies of Pakistan (SECP) on Wednesday directed insurance companies to allow one month free coverage to motor insurance policy holders.
The regulator in a press release said that in light of the outbreak of COVID-19 (Coronavirus) it has been advised non-life insurance companies to grant one month free of cost extension in insurance coverage to all motor insurance policyholders.
The ongoing lockdown situation across the country has resulted in a significant decline in traffic density. With intercity public transport almost at a significant halt and limited within the city commute, it can be inferred that the policyholder claims in relation to motor insurance policies, would also have significantly declined.
Taking into account the decline and/or the anticipated low claim ratio in motor business due to lockdown, insurance companies have been encouraged to take steps to facilitate and pass on the benefit of low claim ratio to motor insurance policyholders.
As the fight against COVID-19 pandemic continues, it becomes imperative that insurance industry show its commitment to serve its policyholders by providing maximum relief and facilitation in all operational aspects. SECP believes that such good gestures in these difficult times will further increase policyholder’s confidence in the insurance sector.
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SECP extends insurance license renewal date
ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has extended license renewal date for insurance brokers in the wake of coronavirus outbreak.
The SECP issued Circular No. 12 on Monday to extend the date for license renewal for insurance business.
The SECP said that considering the gravity of the pandemic coronavirus (COVID-19) on public health and lockdown situation in the country, insurance brokers, insurance surveyors and authorized surveying officers are facing difficulties while ensuring compliance with regulatory requirements related to renewal of license under the Insurance Ordinance, 2000.
The SECP said that in order to facilitate the insurance brokers, insurance surveyors and ASOs during the ongoing pandemic, the regulator issued following guidelines regarding renewal of licenses:
(i) Any insurance brokers/insurance surveyor/ASO whose license has expired or will expire during the period from March 15, 2020 to May 15, 2020 shall continue to carry on its business without renewal of its current license with the commission;
(ii) The above relaxation shall be effective for a period of two months i.e. it shall end on May 15. The respective insurance brokers, insurance surveyors, and ASOs shall be bound to file their applications prior to the deadline of May 15, 2020.
(iii) Upon receipt of the application, license shall be renewed effective from the date of expiry of the previous license.
(iv) Insurance brokers, insurance surveyors and ASOs facing difficulties to arrange documents, required under the Ordinance for renewal of license may avail the above mentioned relaxation.
(v) While surveyors/ASOs can file applications online through e-services, insurance brokers may send their applications to the commission via email until the expiry of the lockdown; and
(vi) All insurance companies/ general takaful operators shall continue to do business with insurance brokers /insurance surveyors/ASOs considering the grace period of two months for any license expired after March 15, 2020.
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SECP directs life insurers to provide details of window Takaful operations
ISLAMABAD: Securities and Exchange Commission (SECP) has directed life insurers to provide details of their Family Takaful operations.
The SECP issued Circular No. 15 dated November 18, 2019 and amended rules for financial reporting of family window Takaful operations by life insurers.
The regulator amended the rules and directed to insurance companies having window Takaful operations to:
— report its assets, liabilities, revenues and expenses separately for each segment of its conventional business and Takaful business;
— to comply with the provisions of these rules or such other conditions as may be imposed by the Commission from time to time.
The SECP under Takaful Rules 2012 also imposed following conditions on life insurers related to financial reporting of their window Takaful operations:
1. Life insurers authorized to carry on window takaful operations shall include the Family Takaful results in their published financial statements as follow:
a. The assets and liabilities of the window family takaful operations shall be consolidated with the assets and liabilities of the conventional operations in the statement of financial position of the life insurer.
b. The incomes and expenses of the window family takaful operations shall be consolidated with the incomes and expenses of the conventional operations in the profit and loss account of the life insurer.
c. Supporting notes where considered necessary for understanding of the users of financial statements shall be included as part of the notes to the financial statements; and
d. The segment disclosure for Family Takaful Operations in accordance with the requirements of IFRS 8- Operating Segments shall be included in the financial statements.
The SECP further directed that in the financial statements the retained earnings of the Participant Takaful Fund (PTF) shall be classified as insurance liability and included in the total liabilities of the Window Family Takaful Operations. Balance of the Operator Sub-Funds under the Window Family Takaful operations, shall be classified as part of shareholders’ equity of the life insurer presented separately into (i) retained earnings attributable to shareholders – ledger account D; and (ii) other components.
The regulator further directed that life insurers shall separately prepare financial statements for Family Takaful operations as if these are carried out by a standalone Takaful Operator and shall be annexed with the insurer’s annual/interim report (as applicable). Supporting notes where considered necessary for understanding of the users of separate financial statements shall be included as part of the notes to the separate financial statements.
“Accordingly, all life insurers undertaking Family Takaful business through window operations are directed to ensure that the financial statements for the periods commencing January 01, 2020 with the SECP under the provisions of applicable laws are in compliance with the conditions placed above.”
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Tax rules for computation of profits, gains of insurance business
KARACHI: Federal Board of Revenue (FBR) has issued updated rules for the computation of profits and gains of the insurance business under Income Tax Ordinance, 2001.
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