ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has issued the draft of Reinsurance Brokers Regulations 2020 for soliciting public comments.
According to a statement issued on Thursday, the proposed regulations aim at bringing reinsurance brokers under regulatory ambit of SECP.
Reinsurance broking refers to arrangement of reinsurance between the insurance company and the reinsurer. The current insurance regulatory framework encompasses the regulation of only “direct” insurance brokers and do not covers the business of reinsurance brokers.
The draft regulations stipulate various regulatory requirements such as minimum paid up capital, statutory deposit, professional indemnity insurance, the requirement to obtain license from the SECP, filing and reporting, disclosure requirements and certain other provisions relating to conduct of reinsurance brokers.
One of the key feature of draft regulations is to prohibit dual role of the licenced insurance brokers by acting as direct insurance broker and reinsurance broker on the same risk either on their own or through their associates or affiliates. The requirement has been proposed to ensure optimization of local risk retention in the non-life insurance industry and to avoid conflict of interest of insurance local brokers along with their foreign affiliates in a single non-life insurance policy.
Interested parties, stakeholder and pubic can submit their comments within thirty days from the date of notification. The draft regulations will be finalized in the light of stakeholder consultation and will be notified after due regulatory approvals.
