Admissible assets

SECTION 32(1) (c) (d)

The proposed amendments are being made in Part V of the Ordinance which deals with Solvency Requirements. The amendments are targeted to omit the words “not to be admissible assets”  in clause © and the words “being assets referred to in clause (g) of sub section 2” in clause (d) It is the basic concern of the regulators that the admissible assets are determined for the purpose of solvency. Therefore the technical lacuna in the drafting of the provisions is being rectified because it is definitely not prudent that an asset is automatically treated admissible just because it is not included in the list of inadmissible assets.

Compulsory Cession

SECTION 42(1)

Comments: After discontinuation of compulsory cession w.e.f. January 1st 2005, the above sub-section was no longer required.

Power of the Commission to order investigation

SECTION 59(4)

New Sub section inserted

Comments: The Commission is further empowered to undertake on-site inspection of insurance company to ensure that the requirements of sound and prudent judgments are being fulfilled. The onsite inspections may be conducted with frequently as deemed appropriate by the Commission. All officers and agents of the company including lawyers, auditors and actuaries are required to supply necessary information as required by the Commission in the course of inspection. It further empowers the inspectors to enter the premises of the company and search and seize take possession of any documents including travel and personal documents which may be used as evidence. Under the normal circumstances, except where it is believed that the record may be destroyed by the insurer the Commission will give two week written notice to the insurer before undertaking an on site inspection.

Power to remove director, chairman etc.

SECTION 65(1) (2)

Comments: The power of the Commission is further elaborated to intervene and remove a CEO or director in order to protect the interest of the policy holders. However, for public sector insurance companies i. e.  National Insurance Company Limited, Pakistan Re insurance Company Ltd and State Life Insurance Corporation of Pakistan the Commission may make a recommendation only to the Federal Government for the Purpose.

Penalty for default in complying with…

SECTION 156

Comments: The proposed amendment seeks to empower the commission to levy fine on the insurer. 

Penalty for false statement in documents

SECTION 158

Comments: The proposed amendment seeks to withdraw the provisions requiring imprisonment which may extend to three years, from this section.