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Amendments in Insurance Act demanded

RECORDER REPORT

KARACHI: The Insurance Association of Pakistan (IAP) has urged the government to make amendments in the Insurance Act of 1938 to avoid any insolvency in the insurance industry of the country.

The association said that the government had engaged foreign consultants on the advice of the Asian Development Bank (ADB) to revise the Insurance Act of 1938. The Act had been judicially scrutinised over the year. Legal experts strongly felt that amendments wherever required could easily be made in the existing Act and continuity should be maintained.

The association remarked that a new draft legislation prepared by the foreign consultants did not at all take into account the ground realities in the country and the present structure of the insurance industry. The consultants were advocating a minimum paid-up capital requirement of Rs 80 million for general insurance companies when only two or three years back the government had fixed it at Rs 20 million. All general insurance companies would be required to bring their paid-up capital to Rs 80 million in three years which is an extremely difficult thing under the present economic conditions, likely to persist even in the coming years.

The foreign consultants have also suggested that the Pakistan insurance market be opened to foreigners and there should be no restriction on placement of insurance and reinsurance abroad. The present law regulates this as the Controller of Insurance has first to be satisfied that local insurers cannot provide cover or absorb the excess in case of reinsurance.