SECP doubles minimum premium limit required for actuarial certification for group life insurance

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has increased the minimum premium limit for group life insurance required for the certification of appointed actuary of a life insurer. The limit has been increased from one million to two million rupees. In this regard, the SECP has issued circular No 11/2013 amending circular No.9/2005, which will take effect on July 1, 2013. Actuarial certification is required to ensure the soundness and workability of group life insurance premium rates and other terms and conditions.

The decision to increase the minimum premium limit for group insurance was based on market survey of group life insurance market conducted by the SECP to assess effectiveness of the regulatory measures introduced in 2005.

The survey showed that the number of group life policies with premium exceeding one million rupees had increased considerably causing practical difficulties for the life insurers and the appointed actuaries. The survey also demonstrates that overall claim ratios had been reasonably stable over the last six years. Considering the positive trend in group insurance sector, the SECP decided to increase the limit from one million to two million for the certification by appointed actuary of a life insurer.

This SECP had issued the Circular on August 16, 2005, on group insurance premium rates. The aforementioned circular required, among other things, that the appointed actuary of a life insurer shall certify that the premium rates and other terms and conditions of each group insurance policy with annual premium of one million or above are sound and workable. The SECP believes that the increase in minimum premium limit would facilitate the insurance industry by enhancing efficiency and reducing overall operating costs.