ISLAMABAD, Jan 10: The insurance companies, which were prohibited from undertaking any insurance business with effect from January 1, 2003, will continue to be responsible for the insurance business already underwritten by them.

This was stated by commissioner (insurance), Syed Etrat Rizvi of the Securities and Exchange Commission of Pakistan here on Friday.

Replying to a question by this correspondent, he said 12 insurance companies were ordered not to underwrite any fresh insurance business for their failure to raise the paid-up capital to the desired level.

Under the Insurance Ordinance, 2000, however, it was their legal responsibility to acquit themselves of their commitments to existing policyholders. The law sufficiently “protects” the policyholders under such circumstances, he added.

When his attention was invited to the claims by some of the insurance companies that they had fulfilled the condition set by the SECP for resuming their business, Mr Rizvi said so far only two companies — Jupiter Insurance Company and Credit Insurance Company — had been permitted even though they had informed the Commission only after the lapse of the deadline (December 31, 2002) about their having arranged the required capital.

Thus as the matters now stand, 10 insurance companies still stand debarred from underwriting any fresh insurance business with a view to safeguarding the interests of policyholders and put the insurance industry on an even keel, he stated.

The Commission, he remarked, had provided ample time to the insurance companies to raise their capital level to the level desired by the law. This provision had been made in view of the fact that some of the companies had been underwriting insurance business beyond their capacity to fulfil their commitments, to the detriment of policyholders and the confidence of the public.

This state of affairs made an abnormal situation in the capital market, stunting the growth of insurance industry along healthy lines, he observed.

It was, he added, in their own interest to fulfil the requirements of the law. The Commission, he added, had accepted after the expiry of due date the applications of these companies for withdrawal of its prohibitory orders in keeping with its policy of playing proactive role.