ISLAMABAD, Oct 12: Standardized selection criteria for the enlistment of insurance companies by the banking sector for normal business would be introduced very shortly to overcome difficulties faced by the insurance sector.

The rationalization of selection criteria would be based on the financial standings, treaty limits and working experience of the insurance companies. This is expected to be finalized jointly by the State Bank of Pakistan (SBP) and Securities and Exchange Commission of Pakistan (SECP) next week.

A meeting of insurance and banking sectors has been convened in Karachi on October 16 (Tuesday) to find out a solution to the crisis that insurance companies believed was creation of nationalized banks through changes in their selection criteria.

To be presided over by chairman Securities and Exchange Commission of Pakistan, the meeting will be attended by heads of some 51 insurance companies, chief executives of all the commercial banks and representatives of the State Bank of Pakistan (SBP).

Insurance was the main sector affected by the September 11 events in the United States that also caused big losses to almost all the business houses in Pakistan because international companies stopped providing reinsurance cover to Pakistani insurance companies.

Local nationalized commercial banks, of late, introduced a system of drawing their own panel of insurance companies, and were doing business exclusively with them that neglected 30 smaller companies.

The meeting on Tuesday would discuss the issues facing the insurance industry in broader perspective and evolve remedial measures.

The Insurance Association of Pakistan (IAP), represented by 51 private insurance companies operating in Pakistan had complained to the SBP and the SECP against selection and eligibility criteria adopted by the banks for enlistment of insurance companies on their panels.

The IAP had demanded of the SBP and SECP to intervene and resolve the issue, as they believed the banks usually engage in business with large companies and smaller and new insurance companies suffered as a result.

After the promulgation of Insurance Ordinance 2000, many banks primarily the nationalized commercial banks deviated from the existing practice of offering different per party risk limits to different companies and revised parameters to enlist insurance companies and to provide per party risk limits.