The Securities and Exchange Commission of Pakistan (SECP) has enhanced jurisdiction of dispute resolution committees (DRC) to arbitrate disputes between the insurers and the policyholders pertaining to insurance policies of individual life contract, domestic insurance policy and private motor insurance policy.
According to the SRO1177 (I)/2016 issued here on Tuesday, the committee to arbitrate certain disputes shall have the authority to arbitrate a dispute having specified pecuniary limit. The SECP has enhanced the limit of Rs 1 million to Rs 2.5 million in case of an individual life contract. The limit has been enhanced from Rs 2 million to Rs 5 million in case of a domestic insurance policy. The SECP has enhanced the limit of Rs 1 million to Rs 2.5 million in case of a private motor insurance policy.
Sources said that the SECP has already notified rules to constitute committees for resolution of disputes arising between the insurers and the policyholders. Through these rules, three committees will work in the cities of Islamabad, Lahore and Karachi, and each committee shall consist of three members ie a chartered accountant or a management accountant, a lawyer and a representative of the Insurance Association of Pakistan (IAP).
The idea behind is to provide maximum relief to the insurance policyholders or their legal heirs in case any dispute arises between them and the insurers. Presently, two other grievance handling forums are operational ie Federal Insurance Ombudsman and the Insurance Tribunals.
Amid many other developmental initiatives of the SECP for the insurance industry, there was keen need to reconstitute the existing dispute resolution committee with adequate empowerment and enhanced jurisdiction with respect to sum insured of the disputed insurance policy, sources added.
Following is the text of the SRO issued by the SECP here on Tuesday: SRO1177(I)/2016: In exercise of the powers conferred by section 117 and sub-section (2) of section 167 of the Insurance Ordinance, 2000 (XXXIX of 2000), read with SRO708(1)/2009 dated 27th July 2009, and having been previously published in the official Gazette vide SRO844(1)/2016, dated 6th September 2016, the Securities and Exchange Commission of Pakistan, with the approval of the Policy Board, is pleased to make the following amendment in the Small Dispute Resolution Committees (Constitution and Procedure) Rules, 2015, notified through SRO829(1)/2015 dated 18th August 2015.
In the aforesaid Rules, rule 6 shall be amended in that the Committee shall have the authority to arbitrate a dispute having following pecuniary limit:
a. In case of an individual life contract, rupees two million five hundred thousand;
b. In case of a domestic Insurance policy, rupees five million; and
c. In case of a private motor insurance policy, rupees two million five hundred thousand.