SECP raises capital requirements
Will be applied in a phased manner until 2017.
Minimum paid-up capital for both non-life and life insurance companies has been increased by an amount of Rs200 million. CREATIVE COMMONS
KARACHI:
The Securities and Exchange Commission of Pakistan (SECP) has increased the minimum paid-up capital requirement for insurance companies.
The Policy Board of the SECP has approved an amendment to the SECP (Insurance) Rules 2002, whereby the minimum paid-up capital for both non-life and life insurance companies has been increased by an amount of Rs200 million.
A new Rule 9 has been inserted under which the baseline paid-up capital requirement for non-life and life insurance companies has been prescribed as Rs500 million and Rs700 million, respectively.
Further, the amount of minimum paid-up capital will be net of any discount offered on issue of shares. These new capital requirements will be applied in a phased manner and the existing insurance companies will be allowed a period of two years, until December 31, 2017, to meet the said requirement.
At the time of the enactment of the Insurance Ordinance, 2000, the minimum paid-up capital requirements for non-life and life insurance companies were Rs80 million and Rs150 million, respectively. In 2007, the paid-up capital requirements for non-life and life insurance companies were increased to Rs300 million and 500 million, respectively, in a phased manner.
In 2012, the SECP formed the Insurance Industry Reforms Committee (IIRC) to evaluate the challenges faced by the insurance industry and to recommend appropriate regulatory reforms that are best suited for its growth. The said committee, in addition to recommending few other amendments to the regulatory framework, also recommended increasing the minimum paid-up capital requirements for insurance companies.
Published in The Express Tribune, August 26th, 2015.
The Securities and Exchange Commission of Pakistan (SECP) has increased the minimum paid-up capital requirement for insurance companies.
The Policy Board of the SECP has approved an amendment to the SECP (Insurance) Rules 2002, whereby the minimum paid-up capital for both non-life and life insurance companies has been increased by an amount of Rs200 million.
A new Rule 9 has been inserted under which the baseline paid-up capital requirement for non-life and life insurance companies has been prescribed as Rs500 million and Rs700 million, respectively.
Further, the amount of minimum paid-up capital will be net of any discount offered on issue of shares. These new capital requirements will be applied in a phased manner and the existing insurance companies will be allowed a period of two years, until December 31, 2017, to meet the said requirement.
At the time of the enactment of the Insurance Ordinance, 2000, the minimum paid-up capital requirements for non-life and life insurance companies were Rs80 million and Rs150 million, respectively. In 2007, the paid-up capital requirements for non-life and life insurance companies were increased to Rs300 million and 500 million, respectively, in a phased manner.
In 2012, the SECP formed the Insurance Industry Reforms Committee (IIRC) to evaluate the challenges faced by the insurance industry and to recommend appropriate regulatory reforms that are best suited for its growth. The said committee, in addition to recommending few other amendments to the regulatory framework, also recommended increasing the minimum paid-up capital requirements for insurance companies.
Published in The Express Tribune, August 26th, 2015.