ISLAMABAD, Oct 31 (INP): The Competition Commission of Pakistan (CCP) has conveyed its concerns to the Securities and Exchange Commission of Pakistan (SECP) on the proposed changes in Insurance Rules, 2002, stating that the proposed changes may affect competition in the Insurance Surveyors Market.
SECP has proposed to change the Insurance Rules, 2002, by raising the paid up capital requirement for insurance surveyors from PKR 1 million to PKR 5 million, and raising indemnity insurance requirement for insurance surveyors from PKR 1 million to PKR 10 million.
SECP, in its letter dated 10 September 2014 to 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.’
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 financial strength to undertake their work, the proposed changes – a five-fold increase in capital requirements and a ten-fold increase in indemnity insurance – will do little to improve either the standards in the industry or inculcate responsibility in the surveyors.
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.
CCP strongly recommended that SECP should drop the raise in capital requirements and indemnity insurance in favor of better competency-based regulations encompassing education, examination, licensing, and continued education requirements. Improved competency-based regulation would be a more pertinent, reasonable, and a less competition-restrictive way to improve standards and inculcate responsibility in the industry.