January 31, 2020: The Insurance Association of Pakistan (IAP) held two separate consultative meetings with the non-life insurance sector and life insurance sector with the Chairman SECP, Mr Aamir Khan on January 30, 2020, at Karachi.
The comprehensive discussions involved challenges related to the implementation of the International Financial Reporting Standard No 17 (IFRS-17) on insurance contracts.
The Chairman SECP assured the industry that the implementation of IFRS-17 will be done through consultation with the industry. The SECP team shared their vision and the significance of the matters, which the entire insurance industry recognize, based on a participative and collaborative discussion.
An agreement was reached on the broad future action plan with the understanding that a structured road map would be finalized for the implementation of IFRS-17 before the end of February 2020, that will cover milestones such as gap analysis, financial impact assessment, building the framework for accounting and actuarial reporting, financial modelling, training of human resources, testing of the models and final implementation.
Chairman SECP assured the insurance industry participants that SECP will provide support and proactively engage with the insurance industry. Another reform that was discussed in detail was how to arrive at the optimal regulatory solution to stimulate the development of the bancassurance distribution channel as well as enriching the buying and servicing experience of insurance policyholders.
The insurance sector has underwritten gross premium of Rs 71 billion through bancassurance channel in 2018 which constituted 31% of the total life insurance premium. It was also thoroughly discussed as how to improve disclosure practices and responsible selling while expanding the insurance distribution channels. The insurance industry also raised their concerns and issues with regards to taxation that are hindering the growth of the insurance sector.
The Chairman SECP informed that he has already taken up the matter with the Chairman FBR as well as the provincial revenue authorities and will continue to pursue the legitimate demands of the insurance industry with the relevant stakeholders.
Lastly there was a discussion on the need to increase the local retention of risk for general insurance with regards to large products and the steps that needs to be taken.
The meetings ended on a very positive note with complete unanimity of view that both the regulator and the insurance industry will work closely for the improvement of the sector.
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