Islamabad, Feb 20: The Securities and Exchange Commission of Pakistan (SECP) has mandated all insurance companies to establish an actuarial function tailored to their business’s size, nature, and complexity. This requirement is part of the proposed amendments under S.R.O. 42(I)/2025 to the Code of Corporate Governance for Insurers, 2016.
The actuarial function will play a crucial role in ensuring financial stability and regulatory compliance within the insurance sector. Its core responsibilities include:
- Data Quality Assessment – The actuarial function must evaluate the quality of data used for investigations, ensuring accuracy, completeness, and compliance with actuarial standards.
- Assessment of Insurance Liabilities – The function is responsible for determining the adequacy of insurance contract assets and liabilities, including reserves for premiums and claims, as per regulatory and financial reporting standards.
- Solvency Requirement Compliance – Actuaries will analyze and maintain minimum solvency levels in line with the Insurance Ordinance, 2000, to safeguard policyholders’ interests.
- Experience Studies and Assumptions – The function will conduct demographic, macroeconomic, and expense-related studies, ensuring that actuarial assumptions remain accurate and relevant.
- Pricing and Underwriting Evaluation – A key role will be to assess the insurer’s pricing policies, aligning them with underwriting and claims management strategies to maintain financial soundness.
- Reinsurance Strategy Assessment – Actuaries will evaluate reinsurance arrangements based on the insurer’s risk appetite, business nature, and solvency position to enhance risk mitigation strategies.
- Investment Strategy Advisory – Through asset-liability management studies, the actuarial function will provide insights on investment policies and strategic asset allocation.
- Coordination for Life Insurers – In the case of life insurance companies, the function will collaborate with the appointed actuary to fulfill obligations under the Insurance Ordinance, 2000, and relevant regulations.
To maintain transparency and independence, the actuarial function must report directly to the Chief Executive Officer (CEO) and present its findings to the Board regularly. Additionally, insurers must ensure that the actuarial function remains independent and free from conflicts of interest. 
Read More:
CDS and COMEX Sign MOU to Boost Pakistan’s IT Presence at COMEX 2025
Each insurer is required to appoint a Head of the Actuarial Function, who must meet specific SECP eligibility criteria. This move by SECP aims to enhance governance, financial prudence, and risk management across the insurance industry, fostering greater confidence among policyholders and stakeholders.
