The Securities and Exchange Commission of Pakistan (SECP) has come up with a Concept Paper on Risk Based Capital (RBC) Regime of the country. The paper introduces a possibility to shift away from the existing solvency-based regime towards an RBC regime for Pakistan’s insurance sector.The paper proposes a framework in line with the best international practices, according to an official familiar with the contents of the paper.

The official said that the new framework introduced in the paper is aimed at improved governance, enterprise risk management and public disclosure practices of the insurers. He said that the existing requirements of the Insurance Ordinance 2000 and Insurance Rules 2017 prescribe a rules-based capital adequacy framework for insurers in Pakistan.

He continued, “while focusing on overarching principles, the Concept Paper contains clear and consistent valuation standards (including explicit best estimates of technical provisions and risk margins) and risk-sensitive capital requirements covering all types of risks which individual insurers are bearing.”

He added, “it also deliberates on the calculation, levels of capital adequacy, methodology for available and required capital, and different risks of capital charges.” The official said that the Concept Paper has been developed based on the recommendations of the Technical Working Group (TWG) instituted by the SECP.The TWG was composed of officials from the Pakistan Society of Actuaries, SECP representatives and actuaries from the private sector.

In order to have a broad-based consultation on the proposed regime and to ensure that the proposed RBC framework is viewed in light of the local industry, SECP has invited all the stakeholders to provide their feedback and comments on the Concept Paper at rbcfeedback@secp.gov.pk.

Credit : Independent News Pakistan-WealthPk