LAHORE: An appellate forum has upheld a penalty of Rs500,000 imposed on an insurance company for violating various sections of the Insurance Ordinance.
The company was found to be non-compliant with regulations during an on-site inspection conducted in 2020. The inspection revealed violations of sections 12(1)(d) & (e), 12(4), 12(5), and 45(6) of the Ordinance.
According to details, an on-site inspection of the appellant (an insurance company) was conducted to assess compliance with the Insurance Ordinance. The inspection revealed several non-compliances, including violations of sections 12(1)(d) & (e), 12(4), 12(5), and 45(6) of the Ordinance. A show-cause notice was issued and the regulatory authority imposed a penalty of Rs500,000. The company filed an appeal against the penalty, citing force majeure events, the impact of the COVID-19 pandemic and other factors.
The company cited force majeure events, such as urban flooding in the city, which resulted in the destruction of files and data. It also cited the challenges posed by the COVID-19 pandemic which made it difficult to hold Board meetings and maintain proper records. Further, it explained that it had relocated its records to a new location due to the flooding, but did not obtain prior approval from the Board of Directors. It claimed that it had proactively implemented precautionary measures to mitigate potential future losses, including scanning and preserving digital copies of all documents but the regulatory authority had failed to provide adequate reasoning for imposing the substantial penalty. The relevant appellate forum upheld the penalty, finding that the company’s explanations did not justify the non-compliances. The forum emphasized the importance of regulatory compliance and maintained that the penalty was rightfully imposed.
According to the insurance experts, this decision serves as a reminder to insurance companies to adhere to regulatory requirements and maintain proper records to ensure the integrity and trustworthiness of their operations.
Copyright Business Recorder, 2025
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