Securities and Exchange Commission of Pakistan (SECP) has directed all insurance companies to make it mandatory that no person will be appointed as an insurance agent, unless he has minimum prescribed qualification and completes the respective foundation course within specified time period. In this regard, the SECP has issued a circular here on Thursday.
According to the SECP circular, it is evident that the insurance agents form one of the most vital links in the whole chain of insurance business. They are the interface of insurance companies with the public at large. A standard professional training to agents in order to enable them to work effectively for the insurance companies appears imperative. It is also a mandatory requirement as is called forth by the Sub-Rule (b) of Rule 26 of the Securities and Exchange Commission (Insurance) Rules 2002 ("SEC Rules"), issued in pursuance of Section 97 of the Insurance Ordinance 2000 ("the Ordinance"). The relevant provision of the SECP Rules may be recounted as follows:
"26. Qualifications required of insurance agents. For the purposes of section .97 of the Ordinance, the following shall be the prescribed qualifications namely: For persons entering the agency contracts after commencement of the Ordinance, the minimum qualification shall be Matriculate or Secondary School Certificate, and in the case of a natural person, that person, or in the case of a body corporate, each director, or in the case of a partnership, each partner, shall have the said qualification, and agents operating in the non-life insurance business shall be required to complete the foundation course of the Pakistan Insurance institute, within a period of three years; and agents operating in the life insurance business shall be required to complete a foundation course of three months durations, to be organised by the concerned insurance company",
SEC Rules added. The SECP said that the onus of compliance with the rule is primarily on insurance companies to ensure that their agents satisfy the statutory requirements. All the insurance companies are, therefore, directed to make certain that no person is appointed as an agent, unless he has the minimum prescribed qualification and completes the respective foundation course within the time period as specified in the statutory provision.
The agents, who have not completed their respective foundation course within the stipulated time, they must complete the same last by September 30, 2013. In case of non-compliance, then any business or transaction after 30th September 2013 carried out by such an agent, lacking the requisite qualification, shall be treated as null and void and no payment of commission can be made to them, SECP added.