$-denominated policy: SECP unveils documentary requirements for insurance companies

The Securities and Exchange Commission of Pakistan (SECP) has issued documentary requirements for insurance companies intending to issue the US dollar denominated insurance policy, directing them to seek recommendation letters from the Commission for every insurance proposal.
The SECP has issued circular number 35 of 2017 Wednesday for issuance of the US dollar denominated insurance policies by local insurance company.
According to the SECP, this is with reference to the State Bank of Pakistan (SBP) circular No 10 of 2017, dated November 01, 2017, wherein it is stated that the insurance companies intending to issue US dollar denominated insurance policy will submit an application for prior approval to the director Exchange Policy Department, State Bank of Pakistan, Karachi, through an authorized dealer along with an explicit recommendation letter from the Securities and Exchange Commission of Pakistan (SECP) for every proposal.
Accordingly, all non-life insurers willing to seek recommendation letter from the SECP, in the matter of obtaining approval from SBP for issuance of the US dollar denominated insurance policies, shall file the following requisite documents, on their letterhead, to the SECP along with their application.
In the case of the US dollar denominated policies required to meet condition of FCY loan raised from abroad, documentary evidence establishing special or general permission given by the SBP to the prospective policyholder shall be filed.
In the case of the US dollar denominated policies required to be issued for projects undertaken in Pakistan as part of bilateral agreement between the government of Pakistan and a foreign country/multilateral agency, a copy of the bilateral agreement or any other document as evidence to the bilateral agreement will be submitted.
The companies would provide evidence of having a minimum insurer financial strength rating of "A" by local credit rating institutions, the SECP said.
In case of coinsurance arrangement with local insurer(s) for the underlying risk, evidence of the local coinsurer(s) having minimum insurer financial strength rating of "A" by local credit rating institutions will be required to submit.
The SECP said that the proposed reinsurance solution covering share of risk proposed to be retained by the insurer/coinsurers (which shall be minimum of 1% of the underlying risk); share of risk proposed to be placed under the reinsurance treaties available with the insurer/ coinsurer(s) and share of risk proposed to be placed under facultative reinsurance arrangement by the insurer/ coinsurer(s) would also be submitted.
Following details would be submitted in respect of the underlying risk: name of insured; type of risk insured; period of insurance; amount of premium; amount of sum insured; amount of risk retained by the insurer (in case of coinsurance, amount of risk retained by coinsurer(s) as per their retention be mentioned); names of coinsurer(s), if any, and any other information, considered necessary.
Any other document/clarification communicated by the SECP to the insurer in writing will also be submitted, the SECP added.