ISLAMABAD: The Competition Commission of Pakistan (CCP) has stated that the proposed changes by the Securities and Exchange Commission of Pakistan (SECP) to Insurance Rules 2002 may affect competition in the Insurance Surveyors Market.
The SECP has proposed to raise the paid-up capital requirement for insurance surveyors from Rs1 million to Rs5m, and indemnity insurance requirement for insurance surveyors from Rs1m to Rs10m.
The SECP, in its letter, dated Sept 10, 2014, to the CCP stated that the changes have been proposed to “establish surveyors on better footing,” ‘to check casual entry and exit of the surveyors, and to “develop an element of responsibility and sensitivity into the surveyor class.”
The CCP in its comments to SECP appreciated the fact that the latter was striving to improve standards in the market, for which it has statutory oversight.
However, it noted that since the insurance surveyors rely more on professional skills rather than financial strength to undertake their work, the proposed changes — a five-fold increase in capital requirements and a 10-fold increase in indemnity insurance — will do little to improve either the standards in the industry or inculcate responsibility in the surveyors.
The CCP feels that the proposed changes will most certainly lead to the exit of smaller insurance surveyors and make the entry of new ones more difficult, thereby affecting competition in the insurance surveyors market.
The proposed increase may have the effect of excluding capable and professional insurance surveyors unable to meet the proposed financial requirements from competing in the market.
The CCP strongly recommends that the SECP should drop the raise in capital requirements and indemnity insurance in favour of better competency-based regulations encompassing education, examination, licensing, and continued education requirements.
Published in Dawn, November 1st, 2014
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