SECP halts guarantee business of United Insurance

May 21, 2025 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has officially ceased the guarantee business of The United Insurance Company of Pakistan Limited, effective immediately, through a Direction issued on May 20, 2025, under section 60 of the Insurance Ordinance, 2000.

Prior to this action, SECP issued a show-cause notice to United Insurance, which obtained a stay order from the Lahore High Court on February 21, 2024.

However, the court dismissed United Insurance’s petition on April 10, 2025, citing it as without merit, according to the press release issued today.

The decision follows United Insurance’s deliberate refusal to encash called guarantees on various pretexts, leading to an accumulation of guarantees totaling Rs2.2 billion by December 2023.

Additionally, complaints amounting to Rs822 million regarding non-encashment were received during 2024 and 2025.

Despite multiple hearing opportunities, the company failed to meet the regulatory requirements to continue its guarantees business.

SECP also found that United Insurance made materially false statements during proceedings about the settlement of a guarantee worth approximately Rs1bn.

This issue will be addressed separately under the Ordinance. To safeguard the interests of policyholders and guarantee holders, and to maintain public trust in the insurance sector, SECP has prohibited United Insurance from issuing new guarantees or rolling over existing ones.

The company has been directed to fulfill obligations related to existing guarantees as they mature.

United Insurance retains the right to seek cancellation or modification of this Direction, provided it complies with regulatory requirements, including securing proper collateral and settling all unpaid guarantees.

As part of its ongoing efforts to enhance compliance and consumer confidence, SECP has addressed over 3,000 complaints since July 1, 2024, resulting in recoveries amounting to Rs1.3bn for policyholders.

This proactive stance by SECP is expected to strengthen compliance in the insurance sector and reinforce public trust.

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