950816

Banking Councl urged

to revise limits for

growth of insurance

KARACHI: Munaf Kohatwala, Chairman, Insurance Association of Pakistan (IAP) called on Sheikh Humayun Sayeed, Vice-President FPCCI on Tuesday, at Federation House, Karachi, and discussed with him the innumberable problems and discrimination being faced by the private insurance industry in Pakistan.

Munaf Kothawala said that the insurance companies are facing tremendous difficulties in growth due to arbitrary fixation of bank limits by the local, foreign banks and DFI's as they have no fixed criterion and the banks, DFI's are not prepared to follow the criterion fixed by the Pakistan Banking Council after a lengthy negotiation with the insurance industry. He demanded that the banks should verify and ascertain the reinusrance arrangements of insurance companies and in the light of such arrangements the Banking Council/banks should fix revised limits of insurance companies.

Kothawala further remarked that the reinsurance requirements of Pakistan Insurance Corporation which were essential to be followed by insurance companies, involve a very complicated documentation procedure, and were affecting the growth of the insurance sector to a great extent by their non-commercial and bureaucratic approach. He stated that the Insurance Act of 1938 has also become outdated and emphasised that the government should make a pragmatic review of the act in consultation with the insurance industry.

He informed that the insurance sector is also confronted with levy of indiscriminate taxation, whereas other commercial organisations are exempted from tax liability for instance taxes have been levied on withholding premium, bonus shares and investment income on the insurance business.

Sheikh Humayun Sayeed appreciated the contribution of the private insurance companies towards the economic development of Pakistan by contributing sufficent revenue to the government and also offering employment opportunities. He stated that the government had to suffer colossal losses due to floods and other natural calamities and suggeted that the insurance sector would assist the government by providing insurance cover to the damages owing to floods and other natural calamities.

He congratulated Munaf Kothawala on his appointment as the Chairman of the IAP and assured him that he will take up the issues with the concerned ministries of finance and commerce for immediate redressal of the problems.

The meeting was also attended by M. Rafiq Khan, Secretary General FPCCI.