Nsurance Ules: Insertions

INSURANCE
RULES, 2017
1. INTRODUCTION
The Insurance Rules, 2017 (“2017 Rules”) were promulgated by the Securities and Exchange Commission of Pakistan on 9 February 2017, which repealed
the Insurance Rules, 2002 (“2002 Rules”) and the Securities and Exchange Commission (Insurance) Rules, 2002 (“SEC Rules”).
Please find below the following tables:
1. ‘Insertions’ made by the 2017 Rules with no corresponding provisions in the 2002 Rules and the SEC Rules;
2. ‘Modifications’ to provisions of the 2002 Rules and the SEC Rules by the 2017 Rules; and
3. ‘Deletions’ from the 2002 Rules and the SEC Rules with no corresponding provisions in the 2017 Rules.
Please note that the extent to which a provision of the 2017 Rules has not been covered in any of the above, there has been no change to the
corresponding provision in the 2002 Rules or the SEC Rules, as the case may be.
1
2. INSERTIONS
INSERTIONS
S. No. Section INSURANCE RULES, 2017
No.
1. 8 Annual supervision fee to be paid by an insurer in terms of clause (c) of sub-section (3) of section 11 of the Ordinance.- Every
insurer registered under the Ordinance shall pay to the Commission, on or before the fifteenth day of January in every calendar year,
an annual supervision fee at the rate of Rs. 2.00 per thousand of gross direct premium written in Pakistan during the calendar year
preceding to the last year, subject to a maximum of rupees fifty million.
2. 11 Minimum paid-up capital requirement for insurers.- (1) For the purposes of sub-section (2) of section 28, the amount given in the
table below shall be the minimum required amount of paid-up capital for an insurer registered under the Ordinance to carry on
insurance business:-

1
Note that any italicized text appearing in this document is not a new provision introduced by the Insurance Rules 2017, and has only been reproduced herein for the purpose of providing
context to the relevant insertion, where required.
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(2) An applicant who, after the commencement of this rule, desires to register itself under the Ordinance shall be required to comply
with the above mentioned minimum paid up capital requirement.
(3) For the purposes of sub-rule (1), the amount of minimum paid up capital will be net off any discount offered on issue of shares.
3. 13(2) Valuation.-
(2) For the purpose of sub-section (3) of Section 34 of the Ordinance the amounts determined under clauses (c) and (d) of sub-section
(2) of section 34 of the Ordinance shall for Accident and Health Business written by a non-life insurer be based on the advice of an
Actuary as defined in Rule 3.
4. 25 Power of the Commission to Issue Directives.-

For the purposes of Section 60 of the Ordinance, the Commission may, if it believes on reasonable grounds that an insurer registered
with the Commission under the Ordinance, has failed, or is about to fail, to comply with the conditions of registration set out in
section 11 of the Ordinance, issue such direction, not inconsistent with and not otherwise provided in the Ordinance, to protect the
interest of the policyholders, as it deem appropriate.
5. 26 Procedure to be followed by the Commission while issuing direction under rule 25.- While issuing directions the Commission shall
follow the following procedure.-

(a) Establishment of Non-Compliance with Section 11: The Commission shall ensure that there is a reasonable ground that an insurer
has failed, or is about to fail, to comply with any conditions of registration set out in section 11 of the Ordinance.

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(b) Notice of Non-Compliance: The Commission shall send a notice to insurer to inform him in writing the details and nature of non-
compliance or potential non-compliance with section 11 and give fifteen days time period to respond to such notice in writing.

(c) Extension of time to respond to the Notice of Non-Compliance: The Commission may grant an extension of time period not
exceeding fifteen days to the insurer to respond to the notice as per sub-rule (b) above:

Provided that no further extension shall be granted if an insurer fails to respond to such notice within the stipulated time period.

(d) Hearing Opportunity: Based on the insurer’s written response of the notice, where the Commission determines that the non-
compliance or potential non-compliance with Section 11 still exists, the Commission shall, while adjudicating upon the rights of insurer
or imposing any other penalty, provide an opportunity of hearing to the insurer within a period of fifteen days by informing the
insurer in writing:

Provided that the Commission may grant an extension of time period not exceeding fifteen days to the insurer on the written
application of insurer to that effect and no further extension shall be granted where an insurer refuses or fails to avail such hearing
opportunity within the stipulated time period.

Provided further that where the Commission is satisfied that delay in issuing direction to the insurer shall be detrimental to the
interest of the insurance policy holders and immediate regulatory action is required, the Commission may, after recording reasons in
writing, immediately issue interim direction to an insurer till the time an opportunity of hearing is provided and a final decision is
taken within a period of not more than thirty days.

(e) Other Considerations: Where the Commission determines that non-compliance or potential non-compliance to Section 11 still
exists, the Commission shall issue such directions to the insurer, having regards to the aspects given under sub-section (4) of section
22 of the SECP Act 1997, (XLII of 1997) as it deem appropriate.
6. 38 Fitness and propriety requirements for the Chief Executive and Directors of Insurance Brokers.- (1) For the purposes of sub-section
(3) of section 102 of the Ordinance, the following shall be the prescribed fitness and proprietary requirements for the Chief Executive
Officer and Directors of the insurance broker.
Provided that a proposed director or chief executive officer of an insurance broker shall not assume the charge of office until his
appointment has been approved by the Commission.
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(2) The fitness and propriety of the chief executive officer and director of an insurance broker shall be assessed by taking into account
all the relevant factors including but not limited to the following:
(a) In determining a person's integrity and track record, a person shall not be considered a Fit and Proper person if such person:

(i) has been convicted in criminal breach of trust, fraud, etcetera;

(ii) has been convicted of an offence involving moral turpitude;

(iii) has been subject to adverse findings, after conducting an inquiry, by the Commission or any other regulatory, judicial or
professional body or any government agency or authority;

(iv) has been involved in the financial irregularities or malpractices in a Company due to which the registration or license of the
Company has been revoked or cancelled or which has gone into liquidation or other similar proceedings;

(v) is ineligible, under the Companies Ordinance, 1984 or any other legislation from acting as a director;

(vi) has entered into a plea bargain arrangement with the National Accountability Bureau or any other regulatory body;

(vii) having served any custodial sentence imposed by a Court of competent jurisdiction, ending within five years preceding the date of
the declaration; or

(viii) having been otherwise declared as disqualified by the Insurance Tribunal, other than for a term which had expired prior to the
date of the declaration.

(b) In determining a person's financial soundness, the following shall be considered:

(i) all persons subject to this Rule shall submit an affidavit to the Commission affirming under the oath that the person and the
companies, firms, sole proprietorship etc. where the person is a chief executive, director (other than nominee director), owner or
partner etc. has no overdue payment of any financial institution.
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Provided that the Commission shall provide an opportunity of making representation to the person in case of overdue or past due
payment;
(ii) all persons subject to this Rule shall not be considered as fit and proper if any overdue/past due payment to a financial institution,
irrespective of amount, is appearing in the overdue column of latest CIB report of the person and of the companies, firms, sole
proprietorship etc. where the person is a chief executive, director (other than nominee director), owner or partner etc.

Provided that the following exceptions may be granted by the Commission for the purpose of this clause in case where:
(a) Amount overdue is under litigation and the same is also appearing as amount under litigation in the CIB report; and

(b) No overdue payment appearing in the overdue column in the subsequent latest CIB report.

(iii) all persons subject to fit and proper criteria under this Rule shall report any change with reference to their financial soundness to
the insurance broker within three business days and the insurance broker shall within a period of seven business days report the same
to the Commission.

(iv) whether the person has applied to be adjudicated as an insolvent and his application is pending; or

(v) whether the person is an un-discharged insolvent.

(c) In determining a person's competence and capability the following shall be considered:

(i) the chief executive must have a minimum educational qualification of a bachelor's degree or equivalent from an
institution recognized by the Higher Education Commission of Pakistan or foreign qualification of equivalent level
recognized by the Higher Education Commission of Pakistan along with insurance related qualification, with at least five
years of management cadre experience working with an insurer,
reinsurer or an insurance/reinsurance broker or surveyor/loss adjustor or corporate agent or in such capacity, in an entity related to
insurance business, or at least seven years of senior level experience with any financial institution as it may satisfy the Commission.

(d) The position of chief executive or director of an insurance broker shall not give rise to any conflict of interest or potential conflict
of interest in accordance with the provisions of the Ordinance.
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(e) After coming into force of these provisions, the insurance broker applying for a new license shall ensure that the person appointed
as chief executive officer or director is in compliance with these provisions; however, the existing chief executive officer and directors
of an existing insurance broker shall comply with these requirements as follows:

(i) the chief executive officer of an insurance broker shall comply with these provisions before the commencement of his new term in
the office, if any, as chief executive officer

(ii) the existing directors of an insurance broker shall comply with these provisions before the commencement of their new term in
the office, if any, as directors.
7. 44(c) Authorised surveying officers — For the purposes of clause (c) of sub-section (3) of section 113 of the Ordinance, any person entitled to
apply to be registered as an authorised surveying officer shall possess the following qualifications, namely:

(c) a fresh applicant, seeking first time registration as an authorised surveying officer, shall be registered by the Commission as an
authorised surveying officer, on obtaining passing marks in a test for any or all classes of insurance surveying business, which shall be
undertaken from any professional institute, approved by the Commission for the purposes of this sub-rule.

Provided that, the requirement of this sub-rule, may be waived by the Commission, if the fresh applicant has undertaken a masters’
degree in any discipline from an HEC recognized university and also has minimum of three years of experience in the financial sector.

Provided further that, the requirement of this sub-rule, may be waived by the Commission, if the fresh applicant is an associate of the
Chartered Insurance Institute and has served in a senior management position in the claims or underwriting department of a non-life
insurer for a period of not less than ten years.
8. 45 Training and Continuous Professional Development: (1) With effect from January 1, 2018, the directors and chief executive officer of
all fresh applicants for classes of insurance surveyor business specified at clause (d), (e), (f), (g) and (h) of sub-rule (1) of rule 41 will
submit Continuous Professional Development Certificate as evidence of completion of four days training undertaken during the
immediate preceding three years’ from an insurance institute(s), approved by the Commission, in the relevant classes.
(2) With effect from January 1, 2018, an application by an authorized surveying officer for renewal will be accompanied by an
evidence of completion of four hours’ Continuous Professional Development in that class in the preceding year from any professional
institute, approved by the Commission.
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9. Proviso Surveys and reports of insurance surveyors.- (4) Every survey conducted by, and report given by, an insurance surveyor shall be
to 47 (4) conducted and given with due diligence and skill, and in good faith and the report shall be finalized as early as possible but within the
period of ninety days:

Provided that where claim, in motor (to include own damage and third party liability) and marine cargo, hull and aviation and
miscellaneous business, amount exceeds rupees one million, and in fire and allied perils and engineering classes amount exceeds
rupees ten million, and final report has not been submitted within the 90 days of his appointment, the insurance surveyor shall submit
preliminary report to the Commission before expiry of the 90 days, mentioning therein the reasons for delay, if any. In case no
preliminary report is submitted within the 90 days in the first instance, he will be required to submit status report thereafter every 90
days.
10. 50(c) Reporting by insurance brokers.- (1) Each year an insurance broker shall be required to provide to the Commission, as at the preceding
31st December, or in respect of the year then ended –

(c) a certificate from the auditors of the insurance broker certifying the amount of net equity maintained by the insurance broker as
on the reporting date;

11. 63 Repeal.- The Insurance Rules, 2002 and the Securities and Exchange Commission of Pakistan (Insurance) Rules, 2002 are hereby
repealed.
12. 64 Savings.- Save as otherwise specifically provided, nothing in these Rules, or any repeal effected thereby, shall affect or be deemed to
affect anything done, action taken, investigation or proceedings commenced, order, appointment, conveyance, mortgage deed,
document or agreement made, fee directed, resolution passed, direction given, proceedings taken or instrument executed or issued,
under or in pursuance of any rules or notifications repealed by these Rules and any such thing, action, investigation, proceedings,
order, appointment, conveyance, mortgage deed, document, agreement, fee, resolution, direction, proceedings or instrument shall if
in force at the coming into force of these Rules and not inconsistent with any of the provisions of these Rules, continue to be in force,
and have effect as if it were respectively done, taken, commenced, made, directed, passed, given, executed or issued under these
Rules.

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3. MODIFICATIONS
MODIFICATIONS
INSURANCE RULES, 2002 SEC (INSURANCE) RULES, 2002 INSURANCE RULES, 2017
S. Section Provision Section Provision Section Provision
No. No. No. No.
1. 2(1)(c) “Class” means the class of insurance 2(1)(c) “Class” means the class of insurance
surveyors as provided in sub -rule (1) of surveyors as provided in sub-rule (1) of
rule 16. rule 41.
2. 3 Restricted classes of insurance 5 Restricted classes of insurance business.-
business.—For the purposes of For the purposes of subsection (6) of
subsection (6) of section 4 of the section 4 of the Ordinance, the
Ordinance, the following shall be the Commission while granting licence as a
restricted classes of insurance business, life or non-life insurer, as the case may
namely:— be, may declare the following as
restricted classes of insurance business
(a) For life insurance: for that applicant, namely:-
(i) pension fund business; and
(ii) accident and health business. (a) For life insurance:
(i) pension fund business; and
(b) For non-life insurance: (ii) accident and health business.
(i) motor third-party compulsory
business; (b) For non-life insurance:
(ii) workers‘ compensation business; (i) motor third-party compulsory
(iii) accident and health business; business;
(iv) proportional treaty business; and (ii) workers‘ compensation business;
(v) non -proportional treaty business. (iii) accident and health business;
(iv) proportional treaty business; and
(v) non -proportional treaty business.
3. 6(3) For the purposes of section 8 of the 7(3) For the purposes of section 8 of the
Ordinance, the documents specified in Ordinance, the documents specified in
clauses (a), (b), (c), (d), (e) and (f) of sub- clauses (a), (b), (c), (d) and (e) of sub-rule
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rule (1) shall be the documents which (1) shall be the documents which may be
may be inspected and copied. inspected and copied.
4. 10 Admissibility of assets.- (1) For the 12 Admissibility of assets.- For the purposes
purposes of sub-section (2) of section 32 of sub-section (2) of section 32 of the
of the Ordinance, the prescribed Ordinance, the percentages specified in
percentages for an insurance company column (3) of the table below shall apply
which was registered as at the for the clauses of the said sub-section
commencement date of the Ordinance, specified in column (1) of that table in
the amount prescribed in the repealed respect of the assets described in column
Act shall be applicable until the 31st (2) thereof.
December, 2002, and thereafter for
such companies, and for a company
registered after the commencement
date, the percentages specified in
column (3) of the table below shall apply
for the clauses of the said sub-section
specified in column (1) of that table in
respect of the assets described in
column (2) thereof.
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(2) Where regulations issued under this
rule, or any amendment to such
regulations, reduces the amount or
proportion of assets which may be held
in a particular form by insurers, those
regulations or that amendment shall not
come into effect until one year from the
date at which the change to regulations
is published, unless the Commission is
satisfied on reasonable grounds that
earlier application is warranted for the
protection of policyholders or to deal
with an actual or apprehended breach
of the Ordinance or the rules made
thereunder.
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5. 12 Minimum required assets in statutory 14 Net admissible assets of life insurers.- (1)
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fund.- For the purposes of sub-sections For the purposes of sub-section (2) of
(3), (4) and (5) of section 35 of the section 35 of the Ordinance, the required
Ordinance, policyholder liabilities shall minimum amount to be maintained in
be determined by the Commission, by the Shareholders’ Fund shall be the sum
notification in the official Gazette: of the following:
Provided that where sub-section (6) of
section 50 applies in respect of a (a) A fixed amount which shall be as
statutory fund, policyholder liabilities follows:
for the purposes of the said sub-sections - till 30 December 2012 – seventy five
shall not be less than the amount million rupees; and
determined by the appointed actuary - thereafter, as per the following table:
under that sub-section.

(b) If the company has been given written
permission by the Commission under
Rule 14(2) below, a solvency margin
calculated in accordance with the
principles set out in Annexure III.

(2) The Commission may grant written
permission to a life insurer to maintain
the solvency margin calculated in
accordance with the principles set out in
Annexure III in its shareholders’ fund and
statutory funds in aggregate (this being in
addition to the fixed amount prescribed
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in Rule 14(1)(a)) instead of in each
statutory fund on the following
conditions:
(a) The life insurer makes an application
in writing, not less than three months
before the date on which such
permission is to come into effect, seeking
permission to maintain the solvency
margin calculated in accordance with the
principles set out in Annexure III in its
shareholders’ fund and statutory funds in
aggregate instead of in each statutory
fund, such margin being in addition to
the fixed amount specified in Rule
14(1)(a); and
(b) The application in Rule 14(2)(a) is
supported by a non-revocable resolution
of the Board of Directors of the life
insurer to maintain the solvency margin
principles set out in Annexure III in its
shareholders’ fund and statutory funds in
aggregate for a period of not less than
ten years from the date of the
application, and, during this period, not
to declare any dividend without the
express written consent of the Appointed
Actuary of the life insurer.
(3) For the purpose of sub-section (3) of
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section 35 of the Ordinance, the surplus
of admissible assets in Pakistan over
liabilities in Pakistan, other than
policyholder liabilities, which a life
insurer shall maintain at all times in each
statutory fund maintained by it for the
conduct of business other than
investment-linked business shall be the
amount of policyholder liabilities plus,
unless written permission has been
granted to the life insurer under Rule
14(2) to maintain the solvency margin in
its shareholders’ fund and statutory
funds in aggregate, a solvency margin
(4) For the purpose of sub-section (4) of
section 35 of the Ordinance, the surplus
of admissible assets in Pakistan over
liabilities in Pakistan, other than
policyholder liabilities, which a life
insurer shall maintain at all times in each
statutory fund maintained by it for the
conduct of investment-linked business
shall be the amount of policyholder
liabilities plus, unless written permission
has been granted to the life insurer under
Rule 14(2) to maintain the solvency
margin in its shareholders’ fund and
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statutory funds in aggregate, a solvency
margin calculated in accordance with the
(5) For the purpose of sub-Section (5) of
Section 35 of the Ordinance, the surplus
of admissible assets denominated in each
currency over liabilities including
policyholder’s liabilities denominated in
such currency shall be a solvency margin
principles set out in Annexure III with
respect to policies denominated in such
currency.
(6) Where sub-section (6) of section 50 of
the Ordinance applies in respect of a
statutory fund, policyholder liabilities for
the purposes of the said sub-sections
shall not be less than the amount
determined by the appointed actuary
under that sub-section.
6. 13 Solvency of non-life insurer.- (1) For the 15 Solvency of non-life insurer.- (1) For the
purposes of clause (a) of sub-section (3) purposes of clause (a) of subsection (3) of
of section 36 of the Ordinance, the section 36 of the Ordinance, the
following shall be the prescribed following shall be the prescribed amount,
amount, namely:- namely:-

(a) In the case of an insurance company (a) till 31 December 2011, fifty million
registered after the commencement rupees; and
date, fifty million rupees; and
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(b) in the case of an insurance company (b) thereafter as per the following table
registered at the commencement date-
(i) the amount applicable under the
repealed Act, until the 31st December,
2002;
(ii) fifteen million rupees until the 31st
December, 2003; (2) For the purposes of clause (b) of sub-
(iii) twenty-five million rupees until the section (3) of section 36 of the
31st December, 2004; and Ordinance, the prescribed percentage
(iv) fifty million rupees until the 31st shall be twenty per cent.
December, 2005, and thereafter.
(2) For the purposes of clause (b) of sub- (3) For the purposes of clause (c) of sub-
section (3) of section 36 of the section (3) of section 36 of the
Ordinance, the following shall Ordinance, the prescribed percentage
be the prescribed percentage, namely:- shall be twenty per cent.
(a) In the case of an insurance company
date, twenty per cent; and
(b) in the case of an insurance company
(i) ten per cent until the 31st December,
2002;
(ii) fifteen per cent until the 31st
December, 2004; and
(iii) thereafter the percentage as set out
in clause (a) of this sub-rule.
(3) For the purposes of clause (c) of sub-
section (3) of section 36 of the
Ordinance, the following shall be the
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prescribed percentage, namely:-
(a) In the case of an insurance company
date, twenty per cent; and
(b) in the case of an insurance company
(i) ten per cent until the 31st December,
2002;
(ii) fifteen per cent until the 31st
December, 2004; and
(iii) thereafter the percentage as set out
in clause (a) of this sub-rule.
7. 6 Assets to be invested in securities.— 16 Assets to be invested in securities.- (1)
(1) Thirty per cent of the assets of the Thirty per cent of the assets, excluding
shareholders‘ fund of a life insurer, or inter-fund receivables of the
of a statutory fund of a life insurer, shareholders‘ fund of a life insurer, or of
other than a statutory fund which a statutory fund of a life insurer, other
contains only investment linked than a statutory fund which contains only
policies, shall be invested in investment linked policies, shall be
Government securities, under sub - invested in Government securities, under
section (7) of section 35 of the sub -section (7) of section 35 of the
Ordinance. Ordinance.
(2) A further ten percent of the assets (2) A further ten percent of the assets,
of the shareholders‘ fund of a life excluding inter-fund receivables of the
insurer, or of a statutory fund of a life shareholders‘ fund of a life insurer, or of
insurer, other than a statutory fund a statutory fund of a life insurer, other
which contains only investment linked than a statutory fund which contains only
policies, shall be invested in a investment linked policies, shall be
combination of Government securities invested in a combination of Government
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and other approved securities, under securities and other approved securities,
sub -section (7) of section 35 of the under sub -section (7) of section 35 of the
Ordinance. Ordinance.
8. 7(2)(b) Reinsurance outside Pakistan 18(2) Reinsurance outside Pakistan
(2) The Commission may, grant (b) (2) The Commission may, grant
permission under sub - rule (1) in any of permission under sub - rule (1) in any of
the following circumstances, namely: the following circumstances, namely:

(b) the insurance business, although (b) the insurance business, although
covered by a treaty arrangement shall covered by a treaty arrangement shall be
be desired to be reinsured facultatively desired to be reinsured facultatively for
for protecting the treaty or for any protecting the treaty or for any other
other special reason: special reason, subject to satisfaction of
the Commission;
Provided that such facultative
reinsurance shall not run contrary to Provided that such facultative
subsisting contractual obligations under reinsurance shall not run contrary to
the treaty subsisting contractual obligations under
the treaty
9. 16 Accounting and reporting.- For the 19 Accounting and reporting.- For the
purposes of sub-sections (1) and (2) of purposes of sub-sections (1) and (2) of
section 46 of the Ordinance, the section 46 of the Ordinance, the
statements as set out in Annexure II statements as set out in Annexure II shall
shall be furnished. be furnished.
Provided that annual accounts for the
period ended 31st December, 2016 and
quarterly accounts for the period ending
31st March 2017 shall be prepared in
accordance with the previous
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requirements.
Provided further that where the
Commission is satisfied that it is not
practicable to give effect or comply with
the formats annexed as Annexure II
under this rule, the Commission may, for
reasons to be recorded in writing, relax
such requirement subject to such
conditions as it may deem fit.
10. 19 Financial condition report.- For the 22 Financial Condition Report. - For the
purposes of section 50 of the Ordinance, purposes of Section 50 of the Ordinance,
the following shall, without limitation, the Financial Condition Report shall be
be included in a Financial Condition prepared in accordance with the
Report prepared by an actuary in requirements prescribed in Annexure IV.
respect of a life insurer, namely:-
(a) The date as at which the valuation of
policyholder liabilities was performed;
(b) the statement required under sub-
section (3) of section 50 of the
Ordinance;
(c) a statement of any reservations or
qualifications to which the report is
subject, including any material matters
in which the appointed actuary has been
unable to comply with any relevant
professional standards to which the
appointed actuary is subject by virtue of
his membership of an actuarial institute,
faculty, society or association;
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(d) a brief description of- (i) the business
underwritten by the life insurer, and the
statutory funds in which it is written; (ii)
the reinsurance arrangements of the life
insurer; (iii) the assets of the life insurer;
(iv) the investment policy of the life
insurer; (v) the unit pricing policy of the
life insurer (where applicable); and (vi)
such other matters relating to the
business of the life insurer as the
appointed actuary believes should be
brought to the attention of the life
insurer;
(e) a statement of the appointed
actuary’s opinion on the adequacy of
premium rates and charges in respect of
policies underwritten by the insurer;
(f) a statement of the appointed
actuary’s valuation of policyholder
liabilities according to the minimum
valuation basis prescribed under sub-
section (5) of section 50 including details
of- (i) the general principles adopted in
the valuation of each class of business
and group of policies in force at the
valuation date; (ii) the reasons for
adoption of those general principles; (iii)
the methods adopted in the valuation;
(iv) policies which under the valuation
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methods would be treated as an asset,
and actions taken to identify and
eliminate such assets from the
valuation; (v) bases adopted for
mortality and morbidity; and (vi)
currency exchange rates adopted in the
translation of liabilities denominated in
foreign currency;
(g) where sub-section (6) of section 50
applies, a statement of the appointed
actuary’s valuation of policyholder
liabilities under that sub-section;
(h) a statement of the appointed
actuary’s determination of the surplus,
surplus arising on participating life
insurance business, if any, surplus
adjustment, if any, and expense
adjustment, if any; and
(i) a statement by the appointed
actuary, expressing an opinion as to
whether- (i) the basis of apportionment
of revenues and expenses between the
statutory and other funds of the life
insurer, and between classes of policy
holder within statutory funds, is fair and
equitable; (ii) the surplus attributed to
participating policyholders has been
determined in accordance with the
Ordinance; (iii) in relation to each
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statutory fund of the insurer, the insurer
has complied, on the valuation date,
with the provisions of so many as are
applicable of sub-sections (3), (4) and (5)
of section 35 of the Ordinance, relying
on the audited statements of admissible
assets; and (iv) the life insurer has
adequate capital to continue its business
at planned levels for a period of not less
than five years.
11. 20 Minimum valuation basis.- (1) For the 23 Minimum valuation basis.- For the
purposes of sub-section (5) of section 50 purposes of sub-section (5) of section 50
of the Ordinance, the minimum of the Ordinance, the minimum valuation
valuation basis shall be such as is basis shall be such as is set out in
determined by the Commission, by Annexure V.
notification in the official Gazette.

(2) Until the issue of a notification under
sub-rule (1), the minimum valuation
basis shall be that applicable under the
repealed Act immediately before the
commencement date of the Ordinance.
12. 23(4) Compliance visiting.- (4) The notice of a 30 (4) Compliance visiting.- (4) The notice of a
visit shall set out the provision or visit shall set out the provision or
provisions of the Ordinance, rules or provisions of the Ordinance, rules,
regulations in respect of which it is regulations or directives of the
proposed to verify compliance. Commission in respect of which it is
proposed to verify compliance.
13. 23(10) Compliance visiting.- (10) The 30(10) Compliance visiting.- (10) The
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MODIFICATIONS
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Commission may have regard to the Commission may have regard to the
results of a compliance visit in deciding results of a compliance visit in deciding
whether to take any action in respect of whether to take any action in respect of a
a party visited under powers given to party visited under powers given to the
the Commission or to the Federal Commission under the Ordinance, rules
Government under the Ordinance, rules or regulations; provided that no such
or regulations; provided that no such action shall be taken without giving the
action shall be taken without giving the party visited an opportunity to be heard.
party visited an opportunity to be heard.
14. 24(2) Independent insurance survey to be 31(2) Independent insurance survey to be
conducted.- conducted.-
(2) Independent survey shall be (2) Independent survey shall be
conducted in respect of the claim lodged conducted in respect of the claim lodged
for the amount exceeding fifty thousand for the amount exceeding one hundred
rupees except in case of motor and thousand rupees except in case of motor
casualty insurance where the amount of and casualty insurance where the
loss or claim is for more than twenty- amount of loss or claim is for more than
five thousand rupees. fifty thousand rupees.

15. 10 Paid-up policy values.—For the 32 Paid-up policy values.- (1) For the
purposes of clause (b) of subsection (3) purposes of clause (b) of subsection (3) of
of section 92 of the Ordinance, the paid section 92 of the Ordinance, the paid-up
-up policy value shall, before the policy value shall, in the case of
inclusion of bonuses, be not less than— participating and non-participating
conventional contracts, before the
inclusion of bonuses, be not less than-

(a) where the whole of the benefits (a) where the whole of the benefits
payable under the policy are payable payable under the policy are payable on a
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MODIFICATIONS
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on a particular date or on the particular date or on the happening of a
happening of a particular event, the particular event, the amount bearing to
amount bearing to the total sum the total sum insured by the policy
insured by the policy exclusive of exclusive of bonuses the same proportion
bonuses the same proportion as the as the total period for which premiums
total period for which premiums have have already been paid bears to the
already been paid bears to the maximum period for which premiums
maximum period for which premiums were originally payable; and
were originally payable; and
(b) where the benefits payable under the
(b) where the benefits payable under policy are payable on two or more dates,
the policy are payable on two or more the amount bearing to total of each
dates, the amount bearing to total of planned payment exclusive of bonuses
each planned payment exclusive of the same proportion as the total period
bonuses the same proportion as the for which premiums have been paid
total period for which premiums have bears to the maximum period for which
been paid bears to the maximum premiums were originally payable less
period for which premiums were any benefit paid earlier.
originally payable less any benefit paid
earlier. (2) In the case of unit linked and universal
life contracts, the paid-up policy value
shall be determined in any of the
following two manners:
(a) the paid up sum insured shall not be
less than the amount of sum cover of the
policy at inception, as long as the cash
value in the unit/investment account is
sufficient to meet the ongoing periodic
administration charges and insurance
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MODIFICATIONS
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coverage charges, otherwise the policy
would lapse without value. Under this
option, the paid up sum insured is
payable at the death of the life assured.

(b) The paid up sum insured shall be
reduced to zero and the policy shall be
maintained for the unit/investment
account only. In such case, the insurance
coverage charges, shall not be deducted
and only the administrative charge shall
be deducted. Under this option, the
amount payable on the death of the life
insured shall be the unit/investment
account value, if any.
16. 25(2) Conduct of agents and insurer.- 33(2) Conduct of agents and insurer.-
(b), (3) (2) For the purposes of sections 96 to (b), (3) (2) For the purposes of sections 96 to 99,
99, the following actions of an insurer the following actions of an insurer shall
shall be treated as violations of the be treated as violations of the Ordinance,
Ordinance, and the insurer shall be and the insurer shall be liable to penalty
liable to penalty as per section 156 of as per section 156 of the Ordinance,
the Ordinance, namely:- namely:
(b) fails to take action as provided in
sub-rule (3) on the written complaint of (b) fails to take action as provided in sub-
the policyholder or intending rule (3) on the written complaint of the
policyholder within a period of one policyholder or intending policyholder
month; within a period of two months;

(3) On receipt of a written complaint
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MODIFICATIONS
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from the policyholder or intending (3) On receipt of a written complaint
policyholder that an agent or any other from the policyholder or intending
person related to the agent has received policyholder that an agent or any other
money in relation to a contract of person related to the agent has received
insurance from the complainant and the money in relation to a contract of
agent has failed to deposit this money insurance from the complainant and the
with the insurer, the insurer shall agent has failed to deposit this money
conduct an inquiry into it and inform the with the insurer, the insurer shall conduct
policyholder or intending policyholder, an inquiry into it and inform the
as the case may be, about the outcome policyholder or intending policyholder, as
of the inquiry within one month period the case may be, about the outcome of
of the complaint. the inquiry within two months period of
the complaint.
17. 26(b) Qualifications required of insurance 34 Qualifications required of insurance
agents.- For the purposes of section 97 agents.- For the purposes of section 97 of
of the Ordinance, the following shall be the Ordinance, the following shall be the
the prescribed qualifications, namely: prescribed qualifications, namely:

(b) for persons entering into agency (b) for persons entering into agency
contracts after commencement of the contracts after commencement of the
Ordinance, the minimum qualification Ordinance, the minimum qualification
shall be Matriculate or Secondary School shall be Matriculate or Secondary School
Certificate, and in the case of a natural Certificate, and in the case of a natural
person, that person, or in the case of a person, that person, or in the case of a
body corporate, each director, or in the body corporate, each director, or in the
case of a partnership, each partner, shall case of a partnership, each partner, shall
have the said qualification, and – have the said qualification, and -
(i) agents operating in the non-life (i) agents operating in the non-life
insurance business shall be required to insurance business shall be required to
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MODIFICATIONS
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complete the foundation course of the complete the foundation course of the
Pakistan Insurance Institute, within a Pakistan Insurance Institute or a
period of three years; and foundation course of thirty days’
duration, to be organized in-house by the
(ii) agents operating in the life insurance concerned insurance company, subject to
business shall be required to complete a that insurance company having prior
foundation course of three months approval of the course syllabus by the
duration, to be organized by the Commission; and
concerned insurance company.
(ii) agents operating in the life insurance
business shall be required to complete a
foundation course of three months
duration, to be organized by the
concerned insurance company.

(c) for persons entering into agency
contracts with insurers after June 30,
2017, the minimum qualification shall be
Higher Secondary School Certificate or
equivalent, and in the case of a natural
person, that person, or in the case of a
body corporate or a partnership, each of
its designated persons engaged in the
business of insurance sales, shall have the
said qualification, and such agents or
designated person shall be required to
undergo a foundation course based on a
curriculum as approved by the
Commission within a period of one year
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MODIFICATIONS
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from the date of entering into agency
contracts, conducted by the respective
insurer or an institute recognized by the
Commission, and shall also be examined
and certified by an institute. The agents
or designated person shall also be
required to attend a refresher course
after every two years from such
institute(s) as specified by the
Commission for the purposes of
continued professional education:

Provided that agents and designated
persons may be given exemption from
the requirement of foundation course
who meet such criteria and requirements
as may be approved by the Commission
from time to time, but such exemption
shall be availed through registering with
an institute as approved by the
Commission.

Provided further that agents or
designated persons who are matriculate
or hold Secondary School Certificate and
have already completed a foundation
course, in case of non-life insurance from
Pakistan Insurance Institute and in case
of life insurance from the respective
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MODIFICATIONS
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insurer prior to commencement of this
sub-rule, shall stand exempted from the
requirement of foundation course. Such
person shall, however, be required to
register with an institute as approved by
the Commission within three months of
the date of effect of this sub-rule and
attend a refresher course after every two
years from such institute(s) as specified
by the Commission for the purposes of
continued professional education.
18. 11(a) Registration of insurance agents.- 35(a) Registration of insurance agents.- Every
(vii), Every insurer shall, in the register (vii), insurer shall, in the register required to
(b) (vii) required to be kept by it for the (b) (vii) be kept by it for the purposes of sub -
purposes of sub -section (1) of section section (1) of section 98 of the
98 of the Ordinance, maintain the Ordinance, maintain the following details
following details in respect of each in respect of each insurance agent,
insurance agent, namely: namely:

(a) For a natural person: (a) For a natural person:

(vii) such other particulars as may be (vii) such other particulars as may be
specified by the Federal Government. specified by the Commission.

(b) For a body corporate: (b) For a body corporate:

(vii) such other particulars as may be (vii) such other particulars as may be
specified by the Federal Government. specified by the Commission.
19. 12(4) Statement and declaration required of 36(4) Statement and declaration required of
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MODIFICATIONS
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insurance agents.- (4) The statement insurance agents.- (4) The statement and
and declaration shall be retained by the declaration shall be retained by the
insurer for a period of not less than five insurer for a period of not less than five
years from the date of the declaration years from the date of the declaration
and shall be produced to the Federal and shall be produced to the Commission
Government on demand. on demand.
20. 13 Requirements for insurance broker’s 37 Requirements for insurance broker’s
Licence .—For the purposes of sub - licence.- For the purposes of sub-section
section (3) of section 102 of the (3) of section 102 of the Ordinance, the
Ordinance, the following shall be the following shall be the prescribed
prescribed qualifications of a company qualifications of a company for issuance
for issuance of an insurance broker‘s of an insurance broker‘s licence, namely:-
licence, namely :—
(a) A minimum paid-up share capital of
(a) A minimum paid-up share capital of not less than fifteen million rupees for an
not less than ten million rupees for insurance broker to be registered in
local brokers and 0.3 million US dollars Pakistan:
for a foreign insurance broker to be Provided that existing licensed insurance
registered in Pakistan; - brokers who have paid up capital less
than the minimum required amount shall
comply with enhanced requirement of
the paid up capital by December 31,
2017:

(b) cash or approved securities to the (b) cash or approved securities to the
value of not less than an half million value of ten percent (10%) of the
rupees, deposited with a bank; minimum prescribed paid up capital of
the insurance broker, deposited with the
State Bank of Pakistan;
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MODIFICATIONS
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Provided that existing licensed insurance
brokers shall comply with the
requirement of statutory deposit by
December 31, 2017.

(c) professional indemnity insurance, to (c) professional indemnity insurance, to a
a limit of ten million rupees for any one limit of thirty million rupees for any one
occurrence; occurrence;
Provided that existing licensed insurance
brokers shall comply with the
requirement of professional indemnity
insurance on the expiry of their active
licence after coming into force of this
provision.
The insurance cover must indemnify an
insurance broker against:
(i) Any error or omission or negligence on
his part or on the part of his employees
and directors;

(ii) Any loss of money or other property
for which the broker is legally liable in
consequence of any financial or
fraudulent act or omission;

(iii) Any loss of documents and costs and
expenses incurred in replacing or
restoring such documents;

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MODIFICATIONS
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(iv) The indemnity cover:

(a) Should be on a yearly basis for
the entire period of license;

(b) Should not contain any terms to
the effect that payments of liabilities
(claims under the policy) depend
upon the insurance broker having
first met the liability;

(c) Should indemnify in respect of all
liabilities (claims under the policy)
made during the period of the
insurance regardless of the time at
which the event giving rise to the
claim may have occurred.

(d) every registered insurance broker
shall maintain a net equity, which is total
(d) not fewer than two employees (at assets of the insurance broker over its
least one of whom must be a director) total liabilities, of at least following
having a minimum of five years percentages of their minimum paid-up
experience working in or in relation to capital, as per the following schedule:
the insurance industry, as —
1st 2nd 3rd Year 4th
(i) an employee of an insurer; or Year of Year of of Year of
Busine Busines Business Busines
(ii) an agent; or ss s s
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MODIFICATIONS
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and
(iii) an employee of an agent; or onwar
ds
(iv) an employee of an insurance 35% 50% 60% 70%
broker; or
Provided that existing insurance brokers
(v) in such capacity, related to the shall comply with this requirement as per
business of insurance, as satisfies the the above schedule from the date of
Federal Government that the person coming into force of this provision.
has appropriate experience and
knowledge to undertake the business Provided further that while determining
of insurance broking; and the value of the assets owned by a
company, any amount on account of
goodwill or of any other intangible asset
like deferred tax asset, shall be
disregarded.

(e) the body corporate engaging in the
business of insurance broking —
(e) neither the body corporate nor any
director of the body corporate, nor any (i) has not been found guilty, within the
officer of the body corporate engaging five years preceding the present date, of
in the business of insurance broking — criminal misappropriation or criminal
breach of trust, cheating or forgery or an
(i) is a minor; abetment of or attempt to commit any
such offence by a Court of competent
(ii) has been found of unsound mind by jurisdiction;
a Court of competent jurisdiction;
(ii) has not been found guilty by a Court
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(iii) has been found guilty, within the of competent jurisdiction of any offence
five years preceding the present date, involving insurance; or
of criminal misappropriation or criminal
breach of trust, cheating or forgery or (iii) has not been otherwise declared as
an abetment of or attempt to commit disqualified by the Insurance Tribunal,
any such offence by a Court of other than for a term which had expired
competent jurisdiction; prior to the present date.

(iv) has served any custodial sentence
imposed by a Court of competent
jurisdiction, ending within the five
years preceding the present date;

(v) has been found guilty by a Court of
competent jurisdiction of any offence
involving insurance; or

(vi) has been otherwise declared as
disqualified by the Insurance Tribunal,
other than for a term which had
expired prior to the present date.
21. 14 Licensing of insurance brokers.— (1) 39 Licensing of insurance brokers.- (1) An
An application for grant of a licence or application for grant of a licence or
renewal of licence to act as an renewal of licence to act as an insurance
insurance broker shall, for the purposes broker shall, for the purposes of sub-
of sub -section (4) or (5) of section 102 section (4) or (5) of section 102 of the
of the Ordinance, shall contain the Ordinance, shall contain the following
following details in respect of the details in respect of the applicant,
applicant, namely: namely:
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MODIFICATIONS
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(i) Its name; (a) registered name of the insurance
(ii) the address of its registered office; broker;
(iii) its postal address (if different); (b) the address of its registered office;
(iv) a description of the business carried (c) its postal address (if different);
on by it (other than insurance broking); (d) details of the insurance broking
(v) the names of insurance companies, business to be carried out by the new
if any, which have appointed the insurance broker and in case of an
applicant as insurance agent; existing insurance broker, details of the
(vi) the names of shareholders holding insurance broking business carried out
more than ten per cent of the issued during the last year including but not
share capital; limited to the break-up of the
(vii) the names of all directors of the revenue/income into reinsurance/
body corporate; and insurance commission, brokerage
(viii) evidence, in original or certified commission, brokerage fees and details
copy form, of compliance with the of any other revenue/income along with
prescribed qualifications. the detailed break-up of the expenses
incurred;
(e) the names of insurance companies, if
any, which have appointed the applicant
as insurance agent along with the details
of these arrangements;
(f) details of the pattern of shareholding
of the issued share capital of the
insurance broker; and
(g) for the purposes of Rule 38 above,
details of the Chief Executive and
Directors of the insurance broker and
duly signed declaration in the form as set
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MODIFICATIONS
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out in Annexure VI and VII, respectively;
(h) the annual audited accounts of the
insurance broker referred to in rule 50 of
these rules.

(2) Every application made under sub-
(2) Every application made under sub- rule (1) shall be accompanied by a
rule (1) shall be accompanied by a declaration by the applicant stating that –
declaration by the applicant stating (a) the information given by him in
that - accordance with sub-rule (1) is complete
(a) the information given by him in and correct;
accordance with sub -rule (1) is (b) he has complied with the
complete and correct; requirements of the Ordinance and the
(b) he has complied with the rules made thereunder concerning the
requirements of the Ordinance and the required qualifications of an insurance
rules made thereunder concerning the broker;
required qualifications of an insurance (c) he undertakes to comply, and (in the
broker; case of an existing insurance broker)
(c) he undertakes to comply, and (in declares that he has during the previous
the case of an existing insurance twelve months has complied with the
broker) declares that he has during the Ordinance and the rules made
previous twelve months complied with thereunder concerning the conduct of an
being the Ordinance and the rules insurance broker; and
made thereunder concerning the (d) the body corporate engaging in the
conduct of an insurance broker; and business of insurance broking —
(d) neither the body corporate, nor any
director of the body corporate, nor any (i) has not been found guilty, within the
officer of the body corporate engaging five years preceding the present date, of
in the business of insurance broking, is criminal misappropriation or criminal
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disqualified from acting in the business breach of trust, cheating or forgery or an
of insurance broking by virtue of — abetment of or attempt to commit any
(i) being a minor; such offence by a Court of competent
(ii) having been found of unsound mind jurisdiction;
by a Court of competent jurisdiction;
(iii) having been found guilty, within (ii) has not been found guilty by a Court
five years preceding the date of the of competent jurisdiction of any offence
declaration, of criminal involving insurance; or
misappropriation or criminal breach of
trust, cheating or forgery or an (iii) has not been otherwise declared as
abetment of or attempt to commit any disqualified by the Insurance Tribunal,
such offence by a Court of competent other than for a term which had expired
jurisdiction; prior to the present date.
(iv) having served any custodial
sentence imposed by a Court of
competent jurisdiction, ending within
five years preceding the date of the
declaration;
(v) having been found guilty by a Court
of competent jurisdiction of any
offence involving insurance; or
(vi) having been otherwise declared as
disqualified by the Insurance Tribunal,
other than for a term which had
expired prior to the date of the (3) The application under this rule shall
declaration. be in writing and signed by at least two
(3) Every application and declaration directors while the declaration required
required under this rule shall be made under this rule shall also be signed by at
in writing and the declaration shall be least two directors of the insurance
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signed by at least two directors of the broker on a stamp paper of appropriate
body corporate. value.

(4) Any application for issue or renewal (4) Any application for issue of initial
of authorization to act as an insurance authorization to act as an insurance
broker shall be accompanied by a fee of broker shall be accompanied by a fee of
ten thousand rupees, which shall be rupees one hundred thousand, which
refunded if the authorization is not shall be refunded in full by the
granted. Commission if the authorization is not
granted.

(5) An insurance broker shall notify to (5) An application for the renewal of
the insurer of any change in the details authorization to act as an insurance
required under sub-rule (1) within broker shall be submitted to the
three months of that change having Commission at least one month prior to
effect, such notification being in the expiry of the licence and shall also be
written form and signed by at least two accompanied by a renewal fee of rupees
directors of the body corporate. seventy five thousand rupees or rupees
two for every rupees one thousand of the
gross revenue, without netting off any
expenses, whichever is higher during the
preceding financial year, subject to a
maximum of rupees five hundred
thousand:

(6) An insurance broker shall notify to the
Commission of any change in the details
required under sub-rule (1) immediately
and not later than two weeks of that
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change having effect, such notification
being in written form and signed by at
least two directors of the body corporate.
22. 15 Protection of run -off. —For the 40 Protection of run-off. —For the purposes
purposes of sub-section (1) of section of sub-section (1) of section 107, the level
107, the level of professional indemnity of professional indemnity insurance shall
insurance shall be ten million rupees be thirty million rupees and the period
and the period for which such run-off for which such run-off insurance is
insurance is required shall be five years required shall be five years or until all
or until all liabilities of an insurance liabilities of an insurance broker are
broker are irrevocably transferred to irrevocably transferred to another
another licensed insurance broker, licensed insurance broker, whichever is
whichever is the earlier. the earlier.
23. 16(1) Classes of insurance surveyors.- (1) For 41(1) Classes of insurance surveyors.- (1) For
the purposes of section 114 of the the purposes of section 114 of the
Ordinance, the following shall be the Ordinance, the following shall be the
classes of insurance surveyors, namely classes of insurance surveyors, namely
(a) Fire and property damage business. (a) Fire and property damage business.
(b) Marine, aviation and transport (b) Marine, aviation and transport
business. business.
(c) Motor third-party compulsory (c) Motor third-party compulsory
business. business.
(d) Liability business. (d) Liability business.
(e) Workers compensation business. (e) Workers compensation business.
(f) Credit and surety ship business. (f) Credit and surety ship business.
(g) Accident and health business. (g) Accident and health business.
(h) Agriculture insurance including crop (h) Agriculture insurance including crop
insurance. insurance.
(i) Miscellaneous business (i) Miscellaneous business (business
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MODIFICATIONS
No. No. No. No.
which does not relate to the classes
mentioned above).

Provided that existing licencees shall
apply for the licence of the above classes
on the expiry of their licence.

Provided further that the persons having
licence for the miscellaneous class and
allowed to undertake class of insurance
surveyors stated at clause (d), (e), (f), (g)
and (h) of this sub-rule, on the date of
notification of these rules shall be issued
licence for the classes as aforesaid within
a year of coming into force of this sub-
rule.
24. 17 Conditions for licensing of insurance 42 Conditions for licensing of insurance
surveyors.—(1) For the purposes of surveyors.— For the purposes of
subsection (3) of section .112 of the subsection (3) of section 112 of the
Ordinance, the following shall be the Ordinance, the following shall be the
prescribed conditions, namely :— prescribed conditions, namely :—

(a) For the purposes of clause (a) of (a) For the purposes of clause (a) of that
that sub-section, the prescribed sub-section, the prescribed minimum
minimum paid-up share capital shall be paid-up share capital shall be two million
one million rupees; rupees;
Whereas, the existing insurance
surveyors shall comply with the
requirement of minimum paid up share
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capital by December 31, 2017.
A surveying company registered under
this Ordinance shall at all times ensure
that the provision relating to minimum
paid up share capital requirements are
complied with.

(b) for the purposes of clause (b) of (b) for the purposes of clause (b) of that
that sub-section, the prescribed sub-section, the prescribed minimum
minimum level of professional level of professional indemnity insurance
indemnity insurance shall be one shall be three million rupees and such
million rupees for any one event and insurance shall extend to a body
such insurance shall extend to a body corporate and all directors or officers of
corporate and all directors or officers of the body corporate who act as authorized
the body corporate who act as surveying officers;
authorized surveying officers;
(c) for the purposes of clause (e) of that (c) for the purposes of clause (e) of that
sub-section, there shall be no approved sub-section, there shall be no approved
professional association; and professional association; and

(d) for the purposes of clause (f) of that (d) for the purposes of clause (f) of that
sub-section, the following shall be the sub-section, the following shall be the
prescribed other conditions, namely :— prescribed other conditions, namely:—

(i) At least one officer or director who is (i) At least one officer or director who is
individually certified as an authorised individually certified as an authorised
surveying officer for the class or classes surveying officer for the class or classes
of insurance surveyor in which a body of insurance surveyor in which a body
corporate acts or proposes to act; and corporate acts or proposes to act; and
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(ii) neither a body corporate in respect (ii) neither a body corporate in respect of
of such of the following conditions as such of the following conditions as apply
apply to the body corporate, nor any to the body corporate, nor any director of
director of the body corporate in the body corporate in respect of such of
respect of such of the following the following conditions as apply to a
conditions as apply to a natural natural person—
person—
(a) is a minor; (a) is a minor;

(b) has been found of unsound mind by (b) has been found of unsound mind by a
a Court of competent jurisdiction; Court of competent jurisdiction;

(c) has been found guilty, within the (c) has been found guilty, within the five
five years preceding the present date, years preceding the present date, of
of criminal misappropriation or criminal criminal misappropriation or criminal
breach of trust, cheating or forgery or breach of trust, cheating or forgery or an
an abetment of or attempt to commit abetment of or attempt to commit any
any such offence by a Court of such offence by a Court of competent
competent jurisdiction; jurisdiction;

(d) has served any custodial sentence (d) has served any custodial sentence
imposed by a Court of competent imposed by a Court of competent
jurisdiction, ending within five years jurisdiction, ending within five years
preceding the present date; preceding the present date;

(e) has been found guilty by a Court of (e) has been found guilty by a Court of
competent jurisdiction of any offence competent jurisdiction of any offence
involving insurance; or involving insurance;
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(f) has been otherwise declared as (f) has been otherwise declared as
disqualified by the Insurance Tribunal, disqualified by the Insurance Tribunal,
other than for a term which had other than for a term which had expired
expired prior to the present date. prior to the present date; or

(2) A body corporate which is, at the (g) has directorship of any insurance
date of coming into force of these brokers company formed under Section
Rules, the holder of a valid licence to 102 of the Ordinance.
act as an insurance surveyor, and which
is not otherwise disqualified from
acting as an insurance surveyor, shall
be deemed to have the qualifications as
set out in sub-clause (ii) of clause (d) of
sub-rule(1) for the period during which
that licence is valid, and at any time
within five years of the date of coming
into force of these rules at which that
licence, or any licence issued in renewal
of that licence, is presented for
renewal.
25. 19(5), (5) An insurance surveyor shall inform 43(5), (5) An insurance surveyor shall inform the
(6) the Federal Government of any change (6) Commission of any change in the details
in the details required to be given required to be given under sub-rule (1) or
under sub-rule (1)or (2) within three (2) within three months of that change
months of that change having taken having taken effect and, such information
effect and, such information shall be in shall be in written form and signed—
written form and signed— (a) in the case of a natural person, by the
(a) in the-case of a natural person, by insurance surveyor and duly attested in
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MODIFICATIONS
No. No. No. No.
the insurance surveyor and duly the presence of witnesses who shall not
attested in the presence of witnesses - be related party of the insurance
who shall not be related party of the surveyor;
insurance surveyor; (b) in the case of a body corporate, by
(b) in the case of a body corporate, by not fewer than two directors of the body
not fewer than two directors of the corporate and duly attested; and
body corporate and duly attested; and (c) in the case of a firm, by not fewer
(c) in the case of a firm, by not fewer than two partners of the firm and duly
than two partners of the firm and duly attested.
attested.
(6) An application for grant of a new
(6) An application for grant of a licence licence or renewal of a licence for any
or renewal of a licence for any class of class of insurance surveyors shall be
insurance surveyors shall be accompanied by a fee of Rs. 25,000/-
accompanied by a fee of two thousand (twenty five thousand) which shall be
rupees which shall be refunded if the refunded if the licence is not granted.
application is not granted.
26. 21 (5), Registration of authorised surveying 46 (5), Registration of authorised surveying
(6) officers — (5) An authorized surveying (6) officers.- (5) An authorized surveying
officer shall inform the Federal officer shall inform the Commission of
Government of any change in the any change in the details required to be
details required to be presented under presented under sub-rule (1) or (2) within
sub-rule (1) or (2) within three months three months of that change having
of that change having effect, such- effect, such information shall be in
information shall be in written form written form and signed by the
and signed by the authorised surveying authorised surveying officer in the
officer in the presence of a witness who presence of a witness who shall be a
shall be a natural person, not a related natural person, not a related party of the
party of the authorized surveying authorized surveying officer and who
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MODIFICATIONS
No. No. No. No.
officer and who shall also sign the shall also sign the declaration as witness.
declaration as witness.
(6) An application for grant of an
(6) An application for registration or Authorized Surveying Officers’ new
renewal of registration as authorized licence or renewal of licence will be
surveying officer shall be accompanied accompanied by a fee of Rs. 5,000/- (five
by a fee of one thousand rupees which thousand rupees) per class.
shall be refunded if the application is
not granted.
27. 22(5), Surveys and reports of insurance 47(5), Surveys and reports of insurance
(6) surveyors.- (6) surveyors.-
(5) If the Federal Government has (5) If the Commission has reason to
reason to believe that a survey believe that a survey performed has not
performed has not been performed been performed with due diligence or
with due diligence or skill, or in good skill, or in good faith, or that it otherwise
faith, or that it otherwise does not does not comply with the conditions of
comply with the conditions of this rule, this rule, such that the report does not
such that the report does not present a present a fair opinion on the matters
fair opinion on the matters contained in contained in the terms of reference, the
the terms of reference, the Federal Commission may direct the insurer to
Government may direct that the arrange an additional survey of the
insurer arrange for an additional survey subject matter of the survey report to be
of -the subject matter of the survey performed by one or more licensed
report to be performed by one or more insurance surveyors who shall be
licensed insurance surveyors who shall approved by the Commission.
be approved by the Federal
Government. (6) An additional survey under sub-rule
(5) shall be performed at the expense of
(6) An additional survey under sub -rule the insurer and a copy of the report on
Page 45 of 50

MODIFICATIONS
No. No. No. No.
(5) shall be performed at the expense the additional survey shall be provided to
of the insurer and a copy of the report the Commission.
on the additional survey shall be
provided to the Federal Government.
28. 35 Insurance policy not to be avoided for 58 Insurance policy not to be issued
non-payment of premium.- without receipt of premium.-
(1) No insurance policy shall be liable to (1) Save as provided under sub-rule (2),
be avoided on the ground that the (3) and (4) below, no insurance policy
premium has not been paid. shall be issued where premium has not
been received by the insurer.
(2) Nothing in this rule shall prevent the (2) An insurer may issue a cover note
inclusion in a policy of a provision to the prior to the receipt of premium, in order
effect that cover under the policy shall to enable the intending policyholder to
not commence until the premium has review the details and scope of coverage
been paid or guaranteed to be paid in being offered.
such manner as may be set out in the Provided that the cover note should not
policy or otherwise accepted or agreed be for a period exceeding seven days in
to by the insurer. the case of motor business and beyond
thirty days in all other cases and must be
replaced with an insurance policy before
expiry of such cover note, subject to
receipt of premium by the insurer.
(3) Notwithstanding the above, an
insurance policy may be issued where the
premium has been mutually agreed to be
paid in installments and the first such
installment has been duly received by the
insurer.
(4) The policy schedule must clearly
Page 46 of 50

MODIFICATIONS
No. No. No. No.
specify the number of agreed
installments and their due dates, along
with a stipulation that cover under the
policy shall stand suspended in case any
instalment is not received within the
scheduled due date thereof.
(5) The provision of this rule shall apply in
respect of direct non-life insurance
contracts only.

Page 47 of 50

DELETIONS
No.
1. 2(1)(d) “Insurance broker” means an insurance broker licensed in accordance with the provisions of the Ordinance and these rules.
2. 2(1)(g) “Surveyor” means an insurance surveyor licensed in accordance with the provisions of the Ordinance and these rules.
3. 18 Transitional provisions relating to natural persons and firms. — Where under the first proviso to sub-section (3) of section 112 of the
Ordinance, a licensed surveyor shall be exempted from the requirement to comply with clause (a) of that sub-section, such exemption
shall be conditional on the licensed surveyor maintaining at all times the following qualifications, namely :—
(a) In the case of a natural person:
(i) the qualifications prescribed in rule 20 for an authorised surveying officer for the class or classes in which the person acts or
proposes to act as insurance surveyor;
(ii) registration of the person as an authorized surveying officer in accordance with the provisions of rule 21; and
(iii) professional indemnity insurance to the extent of five million rupees for any one event provided that this provision shall have
effect from a date twelve months after the commencement date;
(b) In the case of a firm:
(i) at least one officer or partner who is individually registered as an authorized surveying officer for the class or classes of insurance
surveyor in which the firm acts or proposes to act; and
(ii) professional indemnity insurance, extending coverage to the firm and all officers or partners of the firm who act as authorised
surveying officers, to the extent of five million rupees for any one event provided that this provision shall have effect from a date
twelve months after the commencement date;
(c) In the case of a body corporate:
(i) at least one officer or director who is individually registered as an authorized surveying officer for the class or classes of insurance
surveyor in which the body corporate acts or proposes to act; and
(ii) professional indemnity insurance, extending coverage to the firm and all officers or directors of the body corporate who act as
authorised surveying officers, to the extent of five million rupees for any one event provided that this provision shall have effect from
a date twelve months after the commencement date.
(d) In all cases:
Compliance at all times with the qualifications as set out in clause (c) of sub -rule (1) of rule 20, mutatis mutandis, so far as they may
be applied to a natural person, a firm, a body corporate, an officer or partner of a firm and an officer or director of a body corporate.
4. 21 (2), (2) A person who was, at the commencement date of the Ordinance, the holder of a valid certificate issued under sub-section (4) of
(3) section 44A of the repealed Act, and who is not otherwise disqualified from holding a certificate of registration as an authorised
surveying officer, shall he deemed to have the qualifications as set -out in sub-rule (1) for the period during which that certificate is
valid; and at any time within five years of the commencement date of the Ordinance at which—
Page 48 of 50

DELETIONS
No.
(a) that certificate or any licence issued under the Ordinance in renewal of that certificate is presented for conversion to a certificate
of registration; or
(b) any certificate of registration as an authorised surveying officer issued in conversion of that certificate, or in renewal of such
certificate of registration as an authorised surveying officer, is presented for renewal.
(3) A person who is, at the date of coming into force of these Rules, registered as an authorised surveying officer or holds a valid
certificate issued under sub -section (4) of section 44A of the repealed Act, and who is not otherwise disqualified from registration as
an authorised surveying officer, shall be deemed to have the qualifications as set out in clause (a) or (c) of sub-rule (1) for the period
during which that registration or that certificate is valid, and at any time within five years of the date of coming into force of these
Rules at which application is made for renewal of that registration that certificate or any registration issued in renewal or conversion
of that certificate.

Page 49 of 50

4. DELETIONS
DELETIONS
S. No. Section SEC INSURANCE RULES, 2002
No.
1. 2(1)(a) “Bank” means the State Bank of Pakistan.
2. 7 Renewal of registration.- (1) For the purposes of sections 11 and 12 of the Ordinance, every insurer registered under the Ordinance
shall apply for renewal of registration on annual basis.
(2) Every application made under sub-rule (1) shall be accompanied by a declaration by the applicant that the conditions imposed on
registered insurers as specified in sections 11 and 12 of the Ordinance have been complied with.
3. 8 Transitional provisions.- (1) The provisions of this rule shall apply to conversion from a life insurance fund to a statutory fund or funds
under section 25 of the Ordinance.
(2) Upon conversion, an insurer shall allocate all policies, which are in force, including policies, which have been made paid-up under
the provisions of the repealed Act, to one or more statutory funds in accordance with such criteria as may be determined by the
appointed actuary.
(3) Upon conversion, an insurer shall create so many as are required of the ledger accounts specified in sub-sections (1) and (2) of
section 22 of the Ordinance.
(4) As at the date of conversion the opening balance in A, B, C and D accounts shall be determined by the appointed actuary on a fair
and equitable basis having regard to the provisions of the Ordinance.
(5) The amount initially recorded as capital contributed by shareholders shall be the cumulative amount as at the date of conversion
of capital, if any, contributed by shareholders in respect of the business carried on in the statutory fund created by conversion, after
the deduction of any such capital as at that date which has been allocated for the benefit of participating policy holders.
(6) The amount initially recorded as reserves shall be the amount as at the date of conversion of any reserves required to be
maintained under the Ordinance.
(7) Immediately following the recording of the amounts referred to in sub-rules (4), (5) and (6), the insurer may effect a transfer from
the B account to the credit of the C account of not more than such amount which would result in the B account having a credit
balance of one-ninth of the A account:
Provided that in the case of the State Life Insurance Corporation the words “one-ninth” in this sub-rule shall be read as "one-thirty-
ninth".

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