SECP asks people to review terms, conditions of insurance policies

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) urges public at large to carefully read all the contents of documents presented before them by an insurance agent before signing to understand the terms and conditions of the product being offered.

“Reliance may not be placed on verbal promises made by insurance agents unless stated in the policy documents,” an SECP statement said on Friday.

The SECP has always strived to develop a fair, efficient and transparent market, based on international legal standards and best practices, for the protection of investors and policyholders.

A fair, efficient and transparent market was one where the interests of investors and insurance policyholders were adequately protected, the statement added.

The SECP has established a complaint resolution forum known as Service Desk Management System (SDMS) for addressing grievances of general public (including insurance policyholders) against corporate sector. In relation to the insurance sector, SECP received 3,565 complaints through SDMS from 2018 to 2020,

against which relief to the tune of approximately Rs591 million was provided to policyholders.

Additionally, to strengthen the regulatory regime for distribution of insurance products through corporate insurance agents including banks, the SECP notified the Corporate Insurance Agents Regulations, 2020 aimed at curtailing the issue of mis-selling and ensure provision of maximum and clear information regarding terms and conditions of an insurance policy.

The regulations require corporate insurance agents, including banks to ensure provision of clear and detailed disclosures to potential policyholders/customers.

After-sales call-back confirmation process has also been improved and a basic script of call-back confirmation has been included in regulations.

To ensure that the prospective policyholder was aware of the product being offered to him/her by the corporate insurance agent including banks, products structure and corporate agents’ remuneration have been further aligned to policyholder’s interest through rationalisation of commission rates and introduction of minimum premium allocation rates.

The regulations also entitle insurance policyholders to full refund of premium if an insurance policy was cancelled within fourteen days of receipt of the policy documents.

Available forums for redressing complaints of policyholders include, SDMS, Federal Insurance Ombudsman, Small Dispute Resolution Committees in Lahore, Islamabad, and Karachi, Insurance Tribunal, and Prime Minister Deliver Unit.

Policyholders might approach any of these forums for resolution of their complaints, if any, against insurance companies.