SECP proposes mandatory timelines for insurance claims

In a bid to strengthen the country’s insurance sector, the Securities and Exchange Commission (SECP) has proposed mandatory timelines for insurance companies to process and settle claims, in a move aimed at protecting consumers and reducing delays in the insurance sector.

The regulator on Thursday issued the draft Market Conduct Rules 2026 for public consultation, with the proposed framework applicable only to individual insurance policies.

Under the draft rules, life insurance claims would have to be decided within 20 days of receiving the required documents, while motor insurance claims would need to be decided within five days of the survey report. Other non-life insurance claims would have to be decided within seven days of the survey.

Once a claim is approved, insurers would be required to make payment within seven days, said SECP.

The proposed rules also set timelines for health insurance claims. In-patient health insurance claims would have to be settled within 20 days, while insurers would be required to provide hospital discharge authorisation within three hours.

Patients could not be prevented from being discharged from a hospital because of delays by the insurance companies, the SECP said.

The draft rules also seek to limit the documentation burden on policyholders, allowing insurers to request only documents relevant to a claim.

Insurers would additionally be required to publish data on settled, rejected and pending claims on their websites, including the proportion of claims that have remained pending for more than one year.

The proposed framework also introduces timelines for issuing insurance policies. New insurance policy applications would have to be processed within seven days, while life insurance policy documents would have to be issued within a maximum of 20 days.

Policies sold through digital channels would have to be issued within 3 days, said SECP.

For motor insurance, insurers would be required to disclose the current market value of the vehicle to policyholders and explain the implications of over-insurance and under-insurance.

Approved repairs under motor insurance claims would generally have to be completed within 15 days.

The draft rules would also give non-life insurance policyholders the right to cancel a policy without providing a reason.

The SECP has proposed a fine of up to Rs1 million for companies breaching the rules. In cases of continued violations, an additional fine of up to Rs10,000 per day could be imposed.

The regulator has invited proposals and objections from the public and stakeholders within 30 days. Following the consultation process, the proposed rules will be placed before the SECP Policy Board for approval.