Insurance sector hit indiscriminately: SECP

SOHAIL SARFRAZ

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has disclosed that the lockdown and economic disruptions due to Covid-19 have affected the insurance sector indiscriminately.

According to the SECP report on the measures to curtail impact of COVID-19 outbreak, the SECP, taking cognizance of its responsibility, has facilitated the insurance industry to prepare for the coronavirus impact by providing relaxation and relief in regulatory reporting and statutory filing requirements under applicable regulatory framework.

The SECP also advised the insurance industry to prepare a comprehensive plan envisaging how it will manage the effects of the coronavirus outbreak, and assess disruptions and other risks to its services and operations.

Specific measures were also taken to provide necessary relief to the policyholders.

Facilitating Motor Insurance Policyholders through Free Extension of Coverage: Taking into account the anticipated low claim ratio in motor insurance business due to lockdown, the SECP through circular letter has encouraged insurance companies to take steps to facilitate and pass on the benefit of low claim ratio to motor insurance policyholders by granting one month free of cost extension in insurance coverage to all motor insurance policyholders.

Relaxation from Requirements of IAS 39 Impairment of Available for Sale Investment: Keeping in view the effects of the COVID–19 on the investment portfolios of insurance companies, the SECP through SRO 414(I)/2020 allowed relief to companies/entities from the requirements contained in IAS 39 in relation to their Available for Sale (AFS) Equity Investments by allowing them to show impairment loss (if any, due to significant or prolonged decline in fair value of AFS equity investment portfolio), as at March 31, 2020, in the statement of changes in equity.

Facilitation of Policyholders during lockdown: Considering the coronavirus situation, the SECP, through a circular, has asked insurance companies to waive non-mandatory requirements for claims processing.

The SECP has also advised insurers to use alternative methods for verifying the authenticity of claims.

To facilitate policyholders, the SECP has asked companies to consider extension in grace period of payment of renewal premiums under insurance policies. Moreover, insurance companies have been encouraged to utilise digital or online payment modes for receipt of insurance premium and disbursement of claim payments, utilise electronic mediums such as SMS, emails, mobile applications, online portals etc for claims.