New growth scenarios to take effect from Feb ‘19: SECP

RECORDER REPORT

ISLAMABAD: For the benefits of the policyholders, the Securities and Exchange Commission of Pakistan (SECP) has issued new growth scenarios for life insurance and family Takaful from February 2019.

The SECP has issued circular number 22 of 2018 here on Friday.

The SECP said that the life insurance and family Takaful companies use three nominal growth rate scenarios and three inflation adjusted growth rate scenarios to demonstrate projected benefits to potential policyholders. The SECP specifies these growth rate scenarios based on long-term interest rate outlook prevalent in Pakistan.

As interest rates have increased drastically in the country during the past couple of months and future outlook is also showing the rates to increase further in 2019. Accordingly, the growth rate scenarios for life insurance and family Takaful illustrations have been decided by the SECP to be 10%, 12% and 14%, however, inflation adjusted rate of return will remain at 3%, 4%and 5%.

All new illustrations of life insurers and family Takaful operators (including family window Takaful operators) on or after February 1, 2019 should be made on the above stated scenarios. Furthermore, all life insurers and family Takaful operators are required to submit sample illustrations for each product with this office on or before the aforementioned date.