ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Monday announced its decision to develop and implement risk-based capital (RBC) regime for the insurance sector in a phased manner.

In order to introduce the RBC regime, the regulator announced a technical working group comprising of SECP’s Insurance Division officials, the Pakistan Society of Actuaries and insurance companies, tasked with the responsibility of developing the RBC regime.

Under the current framework, compliance-based paid-up capital requirements and solvency requirements are levied on insurance companies.

The solvency regime does take into account liquidity, credit, market, insurance risks etc. in calculation of solvency through admissibility of assets test, however, it does not quantify the levels of different risks borne by insurers.

Published in Dawn, April 28th, 2020