Takaful business rules notified

 The Securities and Exchange Commission of Pakistan (SECP) has notified the Securities and Exchange Commission (micro-insurance) Rules, 2014, which will also regulate the micro-takaful business in the country.

According to the rules, the word micro-insurance may be used interchangeably with the word micro-takaful; life micro-insurance with family micro-takaful; non-life micro-insurance with general micro-takaful; premium with contribution and insurer with operator.

The commission has limited the sum insured equal to 25 times of the minimum monthly wage prescribed by the federal government for single life micro-insurance and personal accident micro-insurance, while the sum insured will not exceed 40 times of the minimum monthly wage prescribed by the federal government for joint life micro-insurance, according to the rules.

Health micro-insurance offered by life insurers will not have the sum insured exceeding five times of the minimum monthly wage prescribed by the federal government for individual health micro-insurance and 15 times of the minimum monthly wage for family health micro-insurance, it said.

The commission has also limited the sum insured for non-life micro-insurance equal to 12 times of the minimum monthly wage prescribed by the federal government for tools, belongings, implements, hutments and other assets; 40 times of the minimum monthly wage prescribed by the federal government for livestock and crop micro-insurance and 25 times of the minimum monthly wage for personal accident micro-insurance.

The SECP has also issued Code of Consumer Protection applicable on all insurers / operators in the business of micro-insurance / takaful.

The insurer / operator will provide to micro-insurance / takaful policyholders with complete, accurate and understandable information regarding the products offered to such policyholders.

The commission also issued the Code of Conduct for Micro-insurance Agents applicable on all micro-insurance / takaful agents and their specified persons.

All micro-insurance related complaints should be handled in the first place by the insurer and the insurer will ensure that the complaints will be acted upon within five working days from the filing of a complaint along with the completion of all required documentation and a resolution will be made within 25 working days from such time.

If the complaint is not resolved at the level of the insurer, it may be referred by the insured to an alternative dispute resolution service approved by the commission from time-to-time, it said.

In case the complaint is not resolved at the level of the alternative dispute resolution service, the complaint may be referred by the insured to the Insurance Ombudsman.

The complaint may also be referred by the insured to the Small Disputes Resolution Committee, it said.

Every insurer undertaking the micro-insurance business will establish an internal dispute resolution mechanism for client complaints and grievances handling, which will facilitate the micro-insurance policyholders for speedy resolution of complaints.

Under the rules, micro-insurance agents and their specified persons should maintain decency and decorum during a visit to collect premium and scrupulously avoid any misdemeanor that would indicate any kind of threat or violence.

For each insurer conducting micro-insurance / takaful business, it will be required to provide regulatory returns under the current reporting requirements but with micro-insurance identified as a distinct category of the respective class of business.