SECP proposes new insurance rules to protect policyholders

August 20, 2026 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has issued the draft Market Conduct Rules 2026 for insurance companies for public consultation, aimed at strengthening protection for insurance consumers.

The proposed rules will apply only to individual insurance policies and introduce mandatory timelines for insurance claim processing and settlement.

Under the draft rules, life insurance claims must be decided within 20 days of receiving the required documents, while motor insurance claims must be decided within 5 days of the survey report. Other non-life insurance claims must be decided within 7 days of the survey.

Once a claim is approved, insurance companies will be required to make payment within 7 days. Hospitalized health insurance claims must be settled within 20 days, while approval for hospital discharge must be provided within 3 hours. Patients cannot be prevented from being discharged due to delays by an insurance company.

Insurance companies will only be allowed to request documents relevant to a claim and will be required to publish data on settled, rejected and pending claims, including the proportion of claims pending for more than one year, on their websites.

Applications for new insurance policies must be processed within 7 days, while life insurance policy documents must be issued within 20 days. Policies sold through digital channels must be issued within 3 days.

For motor insurance, companies will be required to inform policyholders of the vehicle’s current market value and the implications of over-insurance and under-insurance. Approved repairs under motor insurance claims should generally be completed within 15 days.

Non-life insurance policyholders will have the right to cancel their policies without giving a reason.

Violations of the proposed rules may result in a fine of up to Rs1 million, while continued violations may attract an additional fine of up to Rs10,000 per day.

The SECP has invited comments, suggestions and objections from the public and stakeholders within 30 days. Following the consultation, the proposed rules will be presented to the SECP Policy Board for approval.

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