The Securities and Exchange Commission of Pakistan (SECP) has issued a concept paper on Risk Based Capital (RBC) Regime, outlining the possibility of shifting from existing solvency-based regime towards an RBC regime for Pakistan’s insurance sector.
“The proposed framework is consistent with international best practice, aimed at improving corporate governance, enterprise risk management and public disclosure practices of insurers”, said a press release issued here.
The existing requirements of Insurance Ordinance 2000 and Insurance Rules 2017 prescribe a rule-based capital adequacy framework for insurers in Pakistan.
“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”, the press release added.
It also deliberates on the calculation, levels of capital adequacy, methodology for available and required capital and difference risk capital charges, it says.
The concept paper is based on the recommendations of the Technical Working Group (TWG) formed by the SECP. The TWG was composed of officials of Pakistan Society of Actuaries, SECP representative and actuary 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 the light of local industry feedback, SECP has invited all the stakeholders to provide their feedback and comments on the concept paper at [email protected] —APP