ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has decided to carry out technical engagements among provinces, federal government and insurance sector for creation of an insurance pool.

According to an SECP report on insurance pool, the SECP can act as a liaison office for technical engagements between different provincial and federal government departments and the insurance sector so as to proceed towards the creation of an insurance pool for specialized risks.

The consensus of Ministry of Commerce and Ministry of Finance being the key decision-maker, is prerequisite. The complete action matrix has been deliberated in this report for the stakeholders to initiate and benefit from development of insurance pools in Pakistan.

The Insurance Pool may face the big challenge of its capital need for assets acquisition and management of running of the pool. The insurance companies participating in the Insurance pool may have constraints of injecting the capital into the pool because the capital injection from the shareholders of the insurance companies requires strategic decision and involvement of many factors.

The pool may take insufficient risks in terms of volume, which may result in the wipe-out of its assets in case of huge claims. It is therefore imperative to maintain sufficient interest within the pool from the well-diversified portfolio or make the participation mandatory for all insurance companies underwriting the specialised risks for which, the pool is formed.

Copyright Business Recorder, 2024