SECP Moves to Boost Insurance Industry’s Capital Requirements

Islamabad: In a significant policy shift, the Securities and Exchange Commission of Pakistan (SECP) has proposed increasing the minimum paid-up capital (PuC) requirements for insurance companies. This initiative, part of the “Insured Pakistan” agenda, is designed to enhance the financial stability of the insurance sector and improve protection for policyholders.

According to Securities and Exchange Commission of Pakistan, the proposed changes aim to ensure sufficient equity to manage current risks, promote sector stability, protect policyholders’ interests, and enhance the industry’s capacity to absorb local risks. The proposal includes raising the PuC for non-life insurance companies from Rs. 500 million to Rs. 2,000 million and for life insurance companies from Rs. 700 million to Rs. 3,000 million. These increases will be phased in over four years, from 2025 to 2028, allowing existing insurers time to adjust.

The adjustments are aligned with the SECP’s five-year strategic plan and are expected to help local insurers underwrite larger risks and retain a significant share of the local market. This should reduce the need for foreign reinsurance and support the financial robustness of the sector. The implementation of these measures may lead insurers to seek additional capital or consider mergers and acquisitions to meet the new requirements.

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