SECP Proposes Stricter Rules for Insurance Companies

The Securities and Exchange Commission of Pakistan (SECP) has proposed a new regulatory framework that could impose stricter service timelines and heavier penalties on insurance companies. The regulator has opened its draft Market Conduct Rules 2026 for public feedback.

The proposed framework is aimed at individual insurance policies and introduces requirements covering claims processing, policy issuance, customer documentation, motor vehicle repairs and greater disclosure by insurers.

One of the major changes is the introduction of mandatory deadlines for deciding insurance claims. Life insurance claims would need to be assessed within 20 days after the insurer receives all required documentation. Motor insurance claims would have to be decided within five days of receiving the survey report, while other non-life claims would be subject to a seven-day decision deadline.

After approving a claim, insurers would have an additional seven days to release the payment.

The draft also proposes stronger protections for health insurance customers. In-patient claims would have to be processed within 20 days, while hospitals would need to receive discharge authorisation within three hours. Hospitals would not be permitted to delay a patient’s discharge because of an insurer’s failure to process the required approval on time.

Insurers would also face restrictions on repeatedly demanding paperwork from customers. Under the proposed rules, companies could only request documents that are directly relevant to the claim being processed.

The SECP is further seeking greater transparency from insurance companies. Insurers would have to publish claim statistics on their websites, including the number of claims settled, rejected and still pending. Companies would also be required to disclose the percentage of claims that have remained unresolved for more than 12 months.

The proposed framework sets separate deadlines for issuing insurance policies. New applications would generally have to be processed within seven days, while life insurance policy documents could take no longer than 20 days to issue. Insurance policies purchased through digital platforms would have to be issued within three days.

Motor insurance rules would also become more detailed. Insurers would have to clearly communicate the vehicle’s prevailing market value and explain the financial implications of both over-insuring and under-insuring a vehicle. Approved motor vehicle repairs would generally have to be completed within 15 days.

The draft would additionally give non-life insurance customers the option to cancel their policies without having to state a reason.

Companies breaching the proposed requirements could face fines of up to Rs1 million. Continued violations could result in additional penalties reaching Rs10,000 for every day the breach persists.

The SECP released the draft on Thursday and has invited members of the public and relevant stakeholders to submit comments and objections within 30 days. Following the consultation process, the proposed rules will be submitted to the SECP Policy Board for consideration and approval.