Ministry of Law and Justice has directed Securities and Exchange Commission of Pakistan (SECP) to re-draft the Motor Vehicles Act, 1939 for smooth implementation of the Motor Third Party Liability Insurance Scheme to compensate the road accident victims. Sources said that the implementation of Motor Third Party Liability Insurance (MTPLI) was discussed during the last meeting of National Financial Inclusion Strategy (NFIS) Steering Committee (SC).
It is recommended to amend the Motor Vehicles Act, 1939 for smooth implementation of the Motor Third Party Liability Insurance Scheme to compensate the road accident victims. The suggested revisions intend to enhance limit of coverage from Rs 20, 000 to Rs 200, 000.
Ministry of Law and Justice has recently conducted meeting with the SECP and directed it to re-draft the proposed amendments to simplify the complex and lengthy provisions and eliminate ambiguity to every possible extent. Subsequently, the proposed amendment will be presented before the Parliament for sanction.
Recommendations of the Technical Committee on Insurance (TCI): The executive director SECP shared the background and composition of NFIS Technical Committee on Insurance. He updated the committee on recommendations made by NFIS Technical Committee on Insurance.
The first recommendation is introducing insurance education in academic curriculum. In order to impart insurance awareness at grassroots level, the SECP has proposed to introduce insurance education program. In this regard, key content/ outline of the insurance curriculum has been prepared by NFIS TCI. The curriculum will be incorporated in the syllabus of primary, secondary and higher education.
The specialized task of curriculum development is proposed to be assigned to field experts; therefore, the proposal for funding the project, comprising consultancy charges, event management, travelling and media campaign has been submitted to the SBP/ NFIS Secretariat for funding assistance under Financial Inclusion Program (FIP).
Rationalization of Enhanced Due Diligence (EDD) requirement for digitally distributed insurance: Directive for corporate insurance agents including mobile network operators (MNOs) has been drafted that stipulates the threshold for which the simplified Customer Due Diligence (CDD) will be required for digitally distributed insurance policies. The directive also tends to prescribe the regulatory requirements in respect of distribution of insurance through corporate entities including the mobile network operators. The feedback from all stakeholders has been received and the directive would finally get approved from commission in due course.
Insurance awareness through use of vernacular language in insurance policies: In order to enable better understanding of insurance related terms for the insurance policyholders and general public, the NFIS has formulated the standardized insurance glossary for facilitating the usage of vernacular (Urdu) language in insurance policy documents and promotional/ marketing material. The glossary is uploaded on SECP website and intimation has been sent to all insurers to refer to the glossary for preparing insurance policy documents and use in promotional/ marketing activities.
Compulsory Group Life Insurance (CGLI): The committee was informed that regardless of the fact that group life insurance is legally mandatory, a significant part of the labour force remains uninsured. The main reason attributed with such low coverage of insurance is restrictive applicability of law (applicable on companies having more than 50 employees). The committee was further informed that the matter is with the Ministry of Inter-Provincial Coordination and despite repeated follow-ups, no progress has been witnessed.