The Securities and Exchange Commission of Pakistan (SECP) has made it mandatory for the insurance companies, offering guarantees/bonds, to submit additional returns including statements along with the regulatory returns to be filed under Insurance Ordinance. Through a notification issued here on Tuesday, the SECP has made it compulsory for the non-life insurers to submit Additional Returns.
Every insurer offering a guarantee/bond in a particular financial year, shall be required to submit the statements, for each such financial year, along with the regulatory returns to be filed in pursuance of section 46 of the Insurance Ordinance, in the appropriate form set out in the Form GCS. This is in addition to the returns to be lodged under section 46 of the Ordinance and/or any other section of the Ordinance or rule made thereunder.
Any document to be submitted by an insurer under this rule shall be submitted in the manner as is applicable on the regulatory returns required to be submitted under section 46 and section 51 of the Ordinance.
The insurer shall ensure that the credit and suretyship insurance contracts of guarantee/bond shall clearly mention the terms and conditions for claim handling which shall be in accordance with the procedure provided under Section 118 and other related provisions of the Ordinance.
In case of any dispute/grievance, the guarantee holder shall have such remedies as are warranted under the applicable provisions of the Ordinance. 8. Penalty: Any contravention with the requirement of these rules shall be punishable in accordance with the provisions of the Ordinance.
The SECP has also specified the treatment for Collateral Procured by an insurer and settlement of claim. The amount of collateral procured by an insurer shall be kept by the insurer in compliance with section 217 of the Companies Act, 2017 (in case the collateral, partially or wholly, is procured in cash). In case the collateral is procured in any form other than cash, either partially or wholly, then such collateral shall be clearly segregated from the insurer's own assets.
The collateral shall be held in trust and shall be recorded as liability of that insurer until guarantee/bond is either called (ie, claim is lodged) or the underlying guarantee/bond expires. In case of expiry of the guarantee/bond, the insurer shall return the collateral in full upon receiving the cancelled original guarantee/bond and/or a letter of no-objection from the named beneficiary of the underlying guarantee/bond for return of such collateral, SECP added.