ISLAMABAD- The Policy Board of the Securities and Exchange Commission of Pakistan (SECP) has approved the Securities and Exchange Commission Micro insurance Rules, 2014.
The rules prescribe the standards for conduct of micro insurance business while keeping strong focus on consumer protection, transparency, and disclosure requirements.
Micro insurance is a small-scale insurance protection for low-income people against specific risks in exchange for a premium payment proportionate to the risks involved.
In order to serve the low-income population, which is mostly ignored by mainstream commercial insurance businesses, there is a need for small ticket-sized micro insurance products to protect crops, livestock, health, life, and domestic households.
Various developing countries have prescribed specific regulatory frameworks for micro insurance.
In order to achieve consensus and to take all stakeholders on board, the SECP had formed a working group on micro insurance to propose a regulatory framework.
The consultations were done with all relevant stakeholders, including the Insurance Association of Pakistan (IAP), Pakistan Microfinance Network (PMN), Pakistan Poverty Alleviation Fund (PPAF), State Bank of Pakistan (SBP), microfinance banks and donor organizations.
Commissioner for Insurance Division, Mohammed Asif Arif said that there were more than 4 million micro insurance policyholders in Pakistan.
More and more national-level micro insurance programs such as national health and life micro insurance schemes, crop and livestock insurance schemes are being introduced, he added.
The SECP, in coordination with the World Bank published a research report on 'Micro insurance in Pakistan' in October 2012, which is also available at its website.