MoC to seek cabinet nod for Insurance Act, 2026

ISLAMABAD: The Ministry of Commerce (MoC) is set to seek the Cabinet’s approval for the proposed Insurance Act, 2026, aimed at aligning Pakistan’s insurance sector with modern international standards, simplifying the legal framework, and strengthening regulatory oversight, well-informed sources told Business Recorder.

According to sources, the Ministry of Commerce briefed the Cabinet Committee on Disposal of Legislative Cases (CCLC), headed by Minister for Law and Justice, Azam Nazir Tarar, that the existing Insurance Ordinance, 2000 (Ordinance No. XXXIX of 2000) had replaced most provisions of the Insurance Act, 1938, except those relating to legacy contracts.

Over the past two decades, the insurance sector has evolved significantly, necessitating a modern legislative framework aligned with contemporary market needs, international regulatory practices, and evolving governance standards.

READ MORE: MoC set to frame overarching rules for insurance sector

Sources further stated that the Apex Committee of the Special Investment Facilitation Council (SIFC), in its 9th meeting held on February 2, 2024, endorsed key policy objectives for reforming the insurance sector. These include enhancing competition, allowing greater access for international insurance companies, strengthening enforcement mechanisms, corporatisation and divestment of public-sector insurance firms, and aligning the industry with global practices.

In line with these policy directions, the Ministry of Commerce held consultations with key stakeholders, including the Securities and Exchange Commission of Pakistan (SECP), Ministry of Finance, Insurance Association of Pakistan, and state-owned enterprises, and developed proposals for amendments to the Insurance Ordinance, 2000.

The matter was subsequently referred to the Ministry of Law and Justice, which advised that, under Rule 27(1) read with Rule 16(1)(a) of the Rules of Business, 1973, in-principle approval of the Federal Cabinet should be obtained before formal drafting of the bill. Accordingly, the Prime Minister approved placing the proposal before the Cabinet on September 21, 2025.

The Ministry of Commerce further informed the CCLC that during its meeting on December 30, 2025, the committee considered the proposal for amendments but observed that extensive changes to the existing law would be complex and time-consuming. It therefore directed the preparation of a fresh draft law incorporating all proposed amendments, in consultation with the Ministry of Law and Justice, with the Insurance Ordinance, 2000 to be repealed upon enactment of the new legislation.

Following this direction, the Commerce Division prepared the draft Insurance Act, 2026, incorporating earlier proposed amendments. The proposed legislation aims to address gaps in the current regulatory framework by introducing modern concepts aligned with international standards, simplifying the legal structure by shifting detailed provisions to subsidiary regulations, promoting competition through greater market openness, and strengthening market conduct, supervision, and adjudication in the insurance sector.

The Ministry of Commerce informed the CCLC that the draft law was sent to the Ministry of Law and Justice on February 9, 2026, for vetting. After examination, the law ministry conveyed on March 4, 2026, that the draft had been vetted and was in order, advising the Commerce Division to proceed further in accordance with the Rules of Business, 1973.

Under Rule 16(1)(a), legislative proposals are required to be submitted to the Federal Cabinet after examination by the CCLC. Accordingly, the vetted draft Insurance Act, 2026, along with a comparative statement of the Insurance Ordinance, 2000 and the proposed law, was placed before the committee.

The CCLC, in its meeting held on March 10, 2026, approved the draft Insurance Act, 2026.

Sources added that the Ministry of Commerce will now seek formal approval of the proposed law from the Federal Cabinet before presenting it in the National Assembly or Senate for further legislative process.

Copyright Business Recorder, 2026