SECP directs life insurers to join CISSII before May 1

AFP

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) through a regulatory directive on Saturday instructed the life insurance companies and family takaful operators to participate in the Centralised Information Sharing Solution for Life Insurance Industry (CISSII) before May 1. 
The regulatory directive issued through SRO No 162(I)/2014 is part of SECP’s ongoing insurance reforms. It is aimed at promoting a formal information sharing mechanism by making membership mandatory for life insurance companies and family takaful operators, said a SECP press release.
On May 10, 2012, the SECP had constituted the Insurance Industry Reforms Committee (IIRC) to develop a comprehensive roadmap for promoting a financially sound and technologically efficient insurance industry in Pakistan. 
The SECP made the IIRC Report 2014 public on February 27, 2014. The committee had been divided into five subcommittees addressing different functional areas. It was pointed out at the operational challenges subcommittee forum that there was a lack of coordination between insurance companies regarding sharing of some critical information, such as acceptance of claim, postponed or declined life risks, malpractices by agents etc due to absence of a formal information sharing mechanism. The committee highlighted that such a mechanism can be arranged either at the SECP’s level or as an independent body, which has the capacity and technological infrastructure to manage a large data warehouse and support the efficient dissemination of that data.
One such organisation highlighted was the Central Depository Company (CDC), which has proven expertise in this area. 
According to the statement, the committee agreed that the solution proposed by the CDC was beneficial to the life insurance industry and that a modular approach should be adopted in areas such as claim register, agency and s-reference register, underwriting information etc, where immediate development could start. 
Subsequently, a memorandum of understanding (MoU) was signed by all life insurers, including family takaful operators, and the CDC on March 21, 2013, agreeing that CISSII should be developed, as it would be an important mechanism for the life insurance industry in promoting greater efficiency and transparency. Under the MoU, the life insurance and family takaful companies consented to enter into an agreement with the CDC to subscribe to the CISSII to be developed and maintained by the CDC.
The CISSII is an information technology based formal mechanism through which insurers can share specified critical information on real time basis.
The CISSII has four components namely a centralised agents’ register including s-register, centralised register for postponed and declined life risks, centralised claim register and centralised group life claim experience register. Centralised agent register including s-reference register shall contain the agreed information in respect of all codified agents of the insurer. The s-component shall contain codified adverse information relating to the misconduct of agents while the centralized register for postponed and declined life risks shall contain the name and CNIC of the potential customer, proposal date, codified medical and non-medical information, source of medical information and effective date of underwriting decision etc. 
The centralised claim register shall contain the necessary information in respect of all early individual life claims incurred during the first three policy years and having a gross claim liability exceeding Rs 1,000,000. 
The centralised group life claim experience register shall contain claim loss ratio in respect of certain policies based on defined criteria. The CISSII is aimed at enhancing the policyholders’ protection and sound development of the life insurance industry through promotion of a formal information sharing mechanism among the life insurer to reduce systematic risk in life insurance industry.

comments powered by Disqus
  • DailyTimes.Official
  • DailyTimes_DT
  • Rss
Sunday Magazine
Aaj Kal