ISLAMABAD, Jan 1: Securities and Exchange Commission of Pakistan (SECP) has directed 12 insurance companies to cease underwriting insurance business for their failure to raise their paid-up capital to a minimum of Rs50 million by December 31, 2002, according to an announcement here on Wednesday.

The SECP had raised the paid-up capital requirement in line with its mandate to improve and strengthen the capital base of the general insurance companies in order to enhance their “claim-paying capacity”.

There are in all 48 insurance companies in Pakistan. Out of these 36 complied with the directive. Incidentally, almost 92 per cent of the insurance business in the country is with these companies “and the commission feels that they can largely and satisfactorily serve the interest of the public in Pakistan,” remarked the statement.

The remaining 12 insurance companies, which are mostly smaller, have failed to comply with this pivotal statutory requirements despite the lapse of more than 28 months provided to meet the requirements, it added.

Under section 11(1) clause (a), the Commission pointed out, an insurer registered under the Insurance Ordinance, 2000, shall at all times ensure that the provisions of the said Ordinance relating to minimum paid-up capital requirements are complied with.

The SECP is empowered by the Ordinance to issue directive to cease entering into new contracts of insurance, if an insurer has failed to comply with the condition of registration set out in section 11 which, inter alia, include paid-up capital requirement.

The companies which were stopped from underwriting insurance business are: (1) Delta Insurance Company, (2) Ittefaq Insurance Company, (3) Jupiter Insurance Company, (4) Platinum Insurance Company, (5) Prime Insurance Company, (6) Raja Insurance Company, (7) National General Insurance Company, (8) Gulf Insurance Company, (9) Pakistan Guarantee Insurance Company, (10) Credit Insurance Company, (11) Dadabhoy Insurance Company and (12) Union Insurance Company.