SECP Proposes Rs. 1 Million Fine for Insurance Companies Over Claim Delays

The Securities and Exchange Commission of Pakistan (SECP) has proposed new rules aimed at speeding up insurance claim processing and improving services for policyholders. Under the proposed amendments, insurance companies could face fines of up to Rs. 1 million for failing to complete claim assessments within the prescribed deadlines.

The proposed changes seek to establish clearer timelines for handling insurance claims and communicating documentation requirements to customers. They form part of amendments to the Insurance Rules, 2017.

Under the proposed framework, insurers would be required to inform policyholders about the documents needed to process a claim within seven days. This requirement is intended to help customers understand what paperwork they need to provide and reduce uncertainty during the claims process.

The proposal also sets deadlines for insurance surveyors responsible for assessing claims and preparing reports. Surveyors would have 15 days to submit reports for motor insurance claims, while reports for other types of claims would need to be submitted within 30 days.

These timelines are intended to bring greater consistency to claim assessments across different insurance categories. Delays in obtaining survey reports can hold up decisions, leaving policyholders waiting for updates or settlements.

The proposed penalties would introduce a financial consequence for insurers that fail to meet the applicable requirements. Fines of up to Rs. 1 million could apply in cases involving delayed claim assessments, according to the proposal.

For policyholders, the proposed rules could mean more predictable communication and a clearer understanding of how long key stages of the claims process should take. Motor insurance customers, in particular, could benefit from a defined timeframe for survey reports following accidents or vehicle damage.

The changes may also encourage insurance companies to review their internal procedures, improve coordination with surveyors and respond to customers more efficiently. Clear deadlines can help establish accountability, although the practical impact will depend on how the final rules are implemented and enforced.

The SECP regulates Pakistan’s insurance industry and oversees compliance with relevant laws and regulatory requirements. Its proposed amendments to the Insurance Rules, 2017, represent a potential step towards strengthening consumer protection and improving claims-related services.

However, the measures are proposed amendments and should not be treated as final rules unless formally approved and brought into effect. The final notification will determine the precise requirements, applicable deadlines and enforcement arrangements.

Policyholders and insurance companies should monitor official SECP announcements for updates on the proposal. If adopted, the new framework could establish clearer expectations for claim documentation and survey reports while exposing insurers to penalties for failing to meet specified timelines.

Overall, the proposed changes aim to address delays in insurance claim assessments and make the process more transparent for customers. The introduction of defined deadlines and potential fines could increase accountability across Pakistan’s insurance sector.