Insurance Rules in Pakistan 2025: In 2025, Pakistan’s insurance sector is undergoing major reforms, with the Securities and Exchange Commission of Pakistan (SECP) introducing updated rules focused on financial strength, governance, and compliance. This guide provides a complete overview of the new insurance regulations, compliance standards, and how Budget 2025–26 affects the insurance industry.
Updated Insurance Rules and Legal Framework
Core Regulations
- The primary law is the Insurance Ordinance, 2000, updated through recent amendments.
- The Insurance Rules, 2017 have been revised, with the latest version finalized in December 2023.
- In 2025, SECP’s Policy Board approved additional reforms including stronger capital requirements and reporting structures.
Licensing and Eligibility
- Only registered public companies and foreign branches licensed in their home jurisdictions may operate.
- The Insurance Amendment Bill 2024 includes:
- Strict licensing for brokers, insurers, TPAs
- Banned use of informal or unlicensed intermediaries
- Compliance with corporate structure and financial disclosure
Read More: Neem & Jubilee partner to power embedded payments across the insurance value chain
Compliance, Solvency, and Reporting Reforms
Capital Requirements and Solvency
- SECP has increased minimum capital thresholds for life, non-life, and reinsurance companies.
- Insurers must meet enhanced solvency ratios to remain licensed.
Risk Management and Actuarial Guidelines
- All insurers must establish an actuarial function responsible for:
- Reserve adequacy
- Pricing strategies
- Reinsurance planning
- Asset-liability matching
Reporting and Governance
- Updates have been made to Insurance Accounting Regulations (2017) and Takaful Rules (2019).
- SECP mandates regular financial reporting and audit compliance.
- Several insurers have received enforcement orders from SECP in 2025 due to reporting violations.
Federal Budget 2025–26: Impact on Insurance Sector
Key Budget Figures
- Total federal budget: Rs. 17.573 trillion
- Fiscal deficit target: 4.8% of GDP
- Public Sector Development Program (PSDP): Rs. 1 trillion
- Defense allocation: Rs. 2.55 trillion
Sector Implications
| Budget Component | Insurance Sector Impact |
|---|---|
| Increased PSDP spending | Higher demand for project and infrastructure insurance |
| Green and EV incentives | Growth in EV, solar, and climate risk insurance products |
| Digital tax enforcement | Pressure on insurers to maintain AI-compliant reporting |
| Neutral tax policy for insurers | No direct taxation changes in the sector |
Investment Rules and Mandatory Coverages
Foreign Direct Investment
- Foreign investors can hold up to 100% equity in Pakistani insurance companies.
- SECP encourages regulated entry of international insurance brands.
Mandatory Insurance Coverage
- Motor Third Party Liability and Workers’ Compensation remain compulsory.
- Non-admitted insurance is restricted, with exceptions only for marine cargo and licensed reinsurance.
Summary Table
| Category | Details |
|---|---|
| Legal Framework | Based on Insurance Ordinance 2000; updated 2017 Rules and 2024 Amendment Bill |
| Compliance Reforms | Revised capital rules, actuarial reporting, solvency enforcement |
| Budget Impact | Supports growth in project, green tech, and vehicle insurance |
| SECP Oversight | Stronger digital audits and regular compliance inspections |
Conclusion
Pakistan’s insurance landscape is transforming in 2025, with a focus on transparency, solvency, and governance. The SECP’s amendments, alongside the national budget’s focus on infrastructure and digital reforms, are reshaping how insurance companies operate. Insurers must strengthen internal controls and develop products aligned with emerging risks to stay competitive and compliant. Stay tuned with Bloom Pakistan
Read More: Crescent Star Insurance Eyes Rs. 400 Million Property Deal in Karachi
