ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has ceased the guarantee business of the United Insurance Company of Pakistan Limited through direction issued on May 20, 2025, under section 60 of the Insurance Ordinance, 2000.
Prior to issuance of the said Direction, a show-cause notice was issued to the United Insurance. The company obtained a stay order on February 21, 2024 from the Honourable Lahore High Court and on April 10, 2025, the Honourable Court dismissed the petition filed by United Insurance considering it without merit.
United Insurance deliberately refused to encash called guarantees, on different pretexts, over a period of time, resulting in accumulation of guarantees amounting to Rs2.2 billion by December 2023. Further complaints amounting to Rs822 million regarding non-encashment of guarantees were received during year 2024 and 2025.
Despite provision of various hearing opportunities, United Insurance failed to demonstrate the requisite compliance with regulatory requirements to carry on guarantees business.
United Insurance also made materially false statement to SECP, during the proceedings, regarding settlement of one of the guarantees, amounting to approx Rs1 billion. The matter of false statement by United Insurance is to be dealt separately by SECP based on the relevant provisions of Ordinance.
To protect the interests of policy and guarantee holders of United Insurance and to maintain the trust of public in the insurance sector, SECP took the decision to cease the guarantee business of United Insurance with immediate effect. Furthermore, United Insurance has been prohibited from issuing any new guarantees and rolling over existing guarantees. Moreover, United Insurance has been directed to fulfil its obligations with regard to already issued guarantees as and when they become due.
United Insurance has the right to seek cancellation/modification of the Direction from SECP, subject to its compliance with the requirements of regulatory framework including obtaining of proper collateral against the issued guarantees and settlement of all unpaid guarantees.
As part of its ongoing commitment to ensuring compliance and enhancing consumer confidence, SECP has addressed over 3,000 complaints since July 01, 2024, resulting in recovery of policy holders’ claims aggregating to Rs1,300 million. The proactive approach by SECP is expected to enhance compliance in the insurance sector and build public trust.
Copyright Business Recorder, 2025
