Islamabad: The Securities and Exchange Commission of Pakistan (SECP) has proposed new insurance rules to strengthen protection for individual policyholders. The regulator has introduced strict timelines for claim decisions, payments, policy issuance, and other insurance services.
According to the SECP, the draft Market Conduct Rules 2026 will apply specifically to individual insurance policies. Therefore, the proposed framework aims to make insurance companies more transparent and accountable to customers.
The regulator has released the draft for public consultation before moving toward final approval. Moreover, the SECP has invited consumers, insurers, and other stakeholders to submit their feedback within 30 days.
Under the proposed insurance rules, companies will need to follow clear deadlines when processing claims. The SECP wants insurers to handle cases quickly rather than leave customers waiting for long periods.
For life insurance claims, companies must decide within 20 days after receiving all required documents. As a result, insurers will have less room to delay cases after customers complete the documentation process.
Meanwhile, motor insurance companies will need to decide claims within five days after receiving the survey report. For other non-life insurance claims, companies will have seven days after the survey to decide.
The SECP has also proposed a separate deadline for payments after claim approval. Therefore, an insurer will need to pay an approved claim within seven days.
Health insurance customers could also receive stronger protection under the proposed framework. Insurers will need to settle hospitalization claims within 20 days while following the new processing requirements.
More importantly, companies must approve a patient’s hospital discharge within three hours. Moreover, an insurer’s delay cannot prevent the patient from leaving the hospital.
The proposed insurance rules also aim to reduce unnecessary paperwork for customers. Insurance companies will request only documents directly related to the claim and necessary to process it.
Additionally, the SECP wants companies to provide the public with more information about their performance. Insurers will need to publish data about settled, rejected, and pending claims on their websites.
Companies will also disclose the proportion of claims that remain unresolved for more than one year. Consequently, customers could compare insurers based on their claim settlement records before choosing a company.
The regulator has also introduced timelines for new policy applications. Under the proposed system, insurance companies will need to process a new policy request within seven days.
Meanwhile, life insurers will need to provide policy documents within 20 days. However, companies that sell policies through digital channels must issue them within three days.
The proposed insurance rules also introduce important requirements for motor policyholders. Insurers will need to tell customers about the current market value of their vehicles before completing the relevant insurance process.
Furthermore, companies must explain the possible consequences of over-insurance and under-insurance. This requirement could help vehicle owners select more appropriate coverage and understand how valuation may affect future claims.
The SECP has also proposed a timeline for approved vehicle repairs. Under normal circumstances, insurers should complete approved motor repair work within 15 days.
Another major proposal concerns the rights of non-life insurance customers. Policyholders will gain the option to cancel their policies without providing a reason.
However, the strongest part of the proposed framework may involve penalties for non-compliance. The SECP plans to impose financial consequences on insurers that ignore the new requirements.
Under the proposed insurance rules, a company could face a penalty of up to Rs1 million for violating the requirements. Moreover, continued non-compliance could trigger an additional fine of up to Rs10,000 for each day of violation.
These penalties could encourage insurance companies to improve internal systems and respond to customers more quickly. As a result, policyholders may receive faster decisions and clearer information when filing claims.
The proposed framework also places greater responsibility on insurers throughout the customer journey. Companies will need to follow defined standards from the initial policy application to the final settlement of a valid claim.
Moreover, public disclosure requirements could increase competition among insurers. Customers may prefer companies that settle faster and have fewer long-pending claims.
For policyholders, the changes could make claim processing easier to understand. Clear deadlines will help consumers know when to expect a decision or payment from their insurer.
However, the framework has not yet completed the approval process. The SECP will first collect suggestions, objections, and other feedback from the public and relevant industry stakeholders.
The consultation period will remain open for 30 days. Afterward, the regulator will review the feedback and prepare the proposed framework for the next stage.
Finally, after completing public consultation, the SECP will submit the Market Conduct Rules 2026 to the Policy Board for approval. Therefore, the proposed insurance rules could eventually bring significant changes to how individual insurance companies handle policies and claims across Pakistan.
