SECP unveils key reforms to strengthen insurance bonds, guarantees

September 16, 2026 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has proposed key reforms to make insurance bonds and guarantees more secure and reliable.

According to SECP, the reforms will make insurance guarantees used in construction projects, government contracts, imports, and commercial activities more effective.

The new framework will improve financial protection for contractors, businesses, government departments, and project owners.

SECP has proposed clearer terms for bid bonds, performance bonds, advance payment guarantees, and customs guarantees.

If a contractor or business fails to fulfill its obligations, an insurance bond protects the affected party against financial losses, SECP said.

The proposed reforms aim to reduce delays in claim payments, contractual ambiguities, and prolonged legal disputes.

The financial strength and business capability of companies undertaking credit and suretyship insurance will be subject to stricter scrutiny.

SECP has proposed stronger financial reserves, mandatory indemnity agreements, and robust reinsurance arrangements for insurance companies.

Including credit and suretyship insurance in a restricted category will ensure only financially strong and qualified companies can undertake this business, SECP said.

The reforms will reduce financial risks in major projects and commercial contracts and enhance confidence in insurance guarantees, said SECP Chairman Dr. Kabir Ahmed Sidhu.

Stronger insurance guarantees will help ensure timely completion of construction and commercial projects and provide financial protection, he added.

SECP has sought feedback from insurance companies, contractors, businesses, and other stakeholders on the proposed reforms.

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