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

The Pakistan Securities and Exchange Commission (SECP) agreed to establish a system for registering businesses that wish to insure their transactions on a digital basis and for insuring tiny ticket sizes, i.e. microinsurance.

The aim is to promote finance and innovative technologies, leverage cost-effectiveness and accessibility, enhance competition, broaden the product spectrum, enhance customer expertise and increase financial inclusion in the SECP document released on Tuesday.

To date, the Life Insurance Companies' "file and use" provided for in Section 13 of the Insurance Ordinance 2000 have registered with SECP just 27 products.

In addition, technology is used in various aspects of insurance, including technology based innovation products, automated underwriting, policy management, claims processing and payments.

The draught changes to the 2017 Insurance Rules are drawn up for the evaluation and comment of all relevant actors to be obtained within thirty days of issuance of this article with a view to the adoption of a registration regime for micro-insurers and digital-only insurers.

The proposed Digital and Committed Microinsurance registration regime is expected to enable small businesses with visions and plans to innovate and serve the insurance market in order to obtain SECP registration and to comply with the minimum payout capital and solvency requirement lenient regulations.

The idea of proportionality is based on the proposal to register specialised micro-insurers and digital-only insurers with relaxed capital and solvency requirements, SECP said.

Entities interested in carrying out special micro-insurance operations may do so in compliance with the (proposed) regulatory requirements laid out in the draught amendments appended to this document, after registering with the SECP as micro-insurer.

The present insurance firms might nonetheless continue to operate in a current fashion. Lenient capital and solvency requirements were recommended to register specialist micro insurers in accordance with the proportionality principle, as shown in the preceding section.

The special micro-insurer registered in the SEC (Micro-insurance) Rules 2014 meets the criteria of disclosure, product features and file, handling and treatment of claims, processing of complaints, code of behaviour and consumer safety standards, and is not restricted to them.

Digital Insurer Registration

For organisations who wish to transact insurance via digital mode exclusively to allow a creative and visionary Fintech company to enter the insurance market, the lenient registration criteria, i.e. reduced paid-up capital and Solvency requirements, were recommended.

The digital insurer should show the ability to operate via digital modes and conform with the business conduct criteria outlined in the draught amendments, whose main elements are laid forth.

Only digital insurers and micro-insurers can acquire authorisation to perform takaistic activities on a specific or on a window basis in accordance with the requirements of the Takaful Regulations, 2012 after registration. For dedicated mikro-insurers and digital-only insurers, including, among other things Insurance Rules 2017, the Corporate Securities and Exchange Commission of Pakistan Insurance Division Position Paper – Digital and Dedicated Insurer Registry, the Regulatory requirements applicable to full-fledged insurers registered under section 6 of the Insurance Ordinance, 2000 apply. SEC Cybersecurity Guidelines for 2020 SEC (IBNR) Guidance, 2016 SECP added. Insurance Companies (Sound and Prude Management), 2012, Takaful Rules, 2012.

Requirements for solvency:

The minimum needed amount, as a surplus of eligible capital assets over liabilities for life micro insurer shareholde funds and digital only insurers for Life Microinsurer and Life Digital Insurer, is Rupees of 75 million. Rupees will also be suggested as a minimum amount. This sum is just Rupees one hundred and sixty-five million for full-scale insurers registered in accordance with Section 6 of the insurance ordinance 2000.

As set forth in Annex III of the insurance rules of 2017, the solvency margin required for statutory funds is formula-based and is automatically simplified to reflect the volume of the company and activities.

Digital Insurer just for non-life microinsurer and non-life The solvency requirement for an insurer not within the regulatory framework is greater by fifty million and formula-based, determined pursuant to Rule 15(2)(3) of the Insurance Ordinance of 2000 The solvency requirement shall be more than fifty million (3). Fifty million rupees are recommended for non-life microinsurer and non life digital insurer as a permanent solvency margin requirement.

This amount applies exclusively to the Rupees of one hundred and fifty million for fully qualified non-life insurers established under Section 6 of the Insurance Ordinance, 2000. The formula will automatically be streamlined according to the company's volume and activities.

Post a Comment

Please do not enter any spam link in the comment box.