The Securities and Exchange Commission of Pakistan (SECP) has notified amendments to Rule 6 of the Small Dispute Resolution Committees (Constitution and Procedure) Rules, 2015, in exercise of the powers conferred under Section 117 of the Insurance Ordinance, 2000.
The limits of disputes being arbitrated by the SECP as prescribed under the rules were quite nominal, so majority of the disputes did not fall within the jurisdiction of the committees. Therefore, the limits of pecuniary value of claims have been increased to Rs 2.5 million for motor /life insurance policies and Rs 5 million for domestic insurance policies. There was a great need to raise the pecuniary limits of the claims to be arbitrated by these committees. It will complement the existing grievance forums (ombudsman and tribunals) and reduce workload on these forums. The outreach of the grievance forums will be further strengthened and the aggrieved policyholders will have a "fast-track" and "free-of-cost" remedy to their grievances, as the decisions of these committees will be binding on insurers.
Earlier in 2015, the SECP constituted three committees in Islamabad, Lahore and Karachi for resolution of disputes between the insurers and the policyholders which were named as Small Dispute Resolution Committees (SDRCs). Each committee consisted of three members, ie a chartered accountant or a management accountant, a lawyer and a representative of the insurance industry. In addition, the SECP also deputed its officers to act as the official co-ordinators of the three committees.
The idea behind the constitution of these committees was to provide expeditious resolution to the insurance policyholders or their legal heirs in case any dispute arises between them and the insurance companies. In addition to these committees, two other grievance resolution forums, ie the federal insurance ombudsman and the insurance tribunals are also available to the policyholders, where they can file their complaints.-PR