The Securities and Exchange Commission of Pakistan (SECP) has proposed a minimum paid-up share capital of not less than Rs 30 million for an insurance broker to be registered in Pakistan. The draft Insurance Rules, 2015 issued by the SECP revealed that prescribed qualifications of a company for issuance of an insurance broker''s licence.
Firstly, a minimum paid-up share capital of not less than Rs 30 million for an insurance broker to be registered in Pakistan. Provided that existing licensed insurance brokers shall comply with enhanced requirements of the paid-up capital as per the following schedule:
Minimum paid-up capital requirement to be complied with by December 31 of each of the following year by the existing insurance brokers: Rs 15 million (2016); Rs 20 million (2017) and Rs 30 million (2018). Under the prescribed qualifications of a company for issuance of an insurance broker''s licence, the SECP proposed cash or approved securities to the value of not less than Rs 5 million, deposited with the State Bank of Pakistan.
Other prescribed qualifications are professional indemnity insurance, to a limit of Rs 50 million for any one occurrence. The insurance cover must indemnify an insurance broker against any error or omission or negligence on his part or on the part of his employees and directors; any loss of money or other property for which the broker is legally liable in consequence of any financial or fraudulent act or omission and any loss of documents; costs and expenses incurred in replacing or restoring such documents and dishonest or fraudulent acts or omissions by brokers'' employees or former employees.
The indemnity cover should be on a yearly basis for the entire period of license; should not contain any terms to the effect that payments of claims depend upon the insurance broker having first met the liability and should indemnify in respect of all claims made during the period of the insurance regardless of the time at which the event giving rise to the claim may have occurred. Provide the insurance broker with an annual certificate containing the name and address, including but not limited to the policy number, the limit of indemnity, the excess and the name of the insurer as evidence that the cover meets the requirements of the Commission; Every registered insurance broker shall maintain a net asset value, which is total assets of the insurance broker over its total liabilities, of at least following percentages of their minimum paid-up capital, as per the specified schedule, the draft rules added.