ISLAMABAD: The Policy Board of the Securities and Exchange Commission of Pakistan (SECP) has approved the Securities and Exchange Commission Micro insurance) Rules, 2014.
A statement issued by the Commission here on Thursday said that the rules prescribe the standards for conduct of micro insurance business while keeping strong focus on consumer protection, transparency, and disclosure requirements.
Micro insurance is small-scale insurance protection for low-income people against specific risks in exchange for a premium payment proportionate to the risks involved.
In order to serve the low-income population, which is mostly ignored by mainstream commercial insurance business, there is a need for small ticket-sized microinsurance products to protect crops, livestock, health, life, and domestic households, it added.
It said that various developing countries have prescribed specific regulatory frameworks for microinsurance, while many developing countries are in the advanced stages of developing their regulatory framework.
Microinsurance-if not supervised with minimum standards for its transparent conduct and fair management does not produce the desired results, it added.
For microinsurance to grow and benefit the masses in broader context, it is imperative that minimum standards for conduct of such business are prescribed.
The statement said that in order to achieve consensus and to take all stakeholders on board, the SECP had formed a working group on microinsurance to propose a regulatory framework.
The consultations were done with all relevant stakeholders, including the Insurance Association of Pakistan (IAP), Pakistan Microfinance Network (PMN), Pakistan Poverty Alleviation Fund (PPAF), State Bank of Pakistan (SBP), microfinance banks and donor organisations, it added.
Commissioner (Insurance), Mohammed Asif Arif in the statement said that currently there are more than 4 million microinsurance policyholders in Pakistan, mostly in health and credit life microinsurance, this number is growing.
More and more national-level microinsurance programmes such as national health and life microinsurance schemes, crop and livestock insurance schemes, etc. are being introduced, he added.
The research, published by SECP jointly with the World Bank/ FIRST Initiative in 2012 estimated the potential number of microinsurance policyholders at nearly 31 million, he added.
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