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The Securities and Exchange Commission of Pakistan (SECP) Wednesday conveyed to the insurance sector that no change has been made in the nominal rate of return and inflation adjusted rate of return during 2018 to demonstrate projected benefits to potential policyholders. According to circular number 1 of 2018 issued by the SECP here on Wednesday, attention is invited toward clause 8.1, 8.2 and 11.1 of the Directive for Life Insurance and Family Takaful Illustrations, 2016 (hereinafter referred to as the "Directive") notified via S R O 255(1)/2016 dated March 25, 2016.
Life insurance and family Takaful companies use three nominal growth rate scenarios and three inflation adjusted growth rate scenarios to demonstrate projected benefits to potential policyholders. The SECP specifies these growth rate scenarios based on long-term interest rate outlook prevalent in Pakistan, SECP said. In this regard, the commission has decided that, for the year 2018, there should be no change in the nominal rate of return and inflation adjusted rate of return as specified for the year 2017 through circular No.30 of 2017 dated January 20th 2017. Accordingly, for the year 2018 and onwards, the nominal rate of return will remain at 6, 8 and 10 percent and inflation-adjusted rate of return will remain at 3, 4 and 5 percent, SECP added.

Copyright Business Recorder, 2018

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