The Securities and Exchange Commission of Pakistan (SECP) has issued the draft Market Conduct Rules 2026 for insurance companies, proposing stricter timelines for claim processing and stronger protections for insurance consumers.
The proposed rules, issued for public consultation, will apply specifically to individual insurance policies and introduce mandatory deadlines for insurers to process and settle claims.
Under the draft framework, insurance companies would also face financial penalties for violating the proposed requirements.
Insurance Claims To Face Mandatory Deadlines
The draft rules set different deadlines depending on the type of insurance claim.
Life insurance claims would have to be decided within 20 days of the insurer receiving all required documents.
For motor insurance, companies would be required to decide claims within five days of receiving the survey report.
Other non-life insurance claims would have to be decided within seven days of the survey.
Once an insurance claim has been approved, the insurer would be required to make the payment within seven days.
The SECP’s proposed timelines are intended to reduce delays and provide greater certainty to policyholders waiting for claim decisions and payments.
Health Insurance Claims Get Stricter Protection
The proposed rules also introduce specific requirements for health insurance claims involving hospitalisation.
Hospitalised health insurance claims would have to be settled within 20 days.
Insurance companies would also be required to provide approval for hospital discharge within three hours.
Importantly, patients could not be prevented from leaving a hospital because of delays caused by an insurance company.
The proposed requirement seeks to ensure that disputes or delays between hospitals and insurers do not unnecessarily keep patients admitted.
Insurers Limited To Relevant Documents
Under the draft rules, insurance companies would only be allowed to request documents that are relevant to the claim being processed.
The proposed requirement is aimed at preventing unnecessary documentation from becoming a reason for delaying or rejecting claims.
Insurers would also have to publish information on their websites showing the number of claims that have been settled, rejected and remain pending.
The published information would also have to include the proportion of claims that have remained pending for more than one year.
This requirement is expected to improve transparency and allow consumers to better assess the claims-handling performance of insurance companies.
New Insurance Applications To Be Processed Quickly
The draft Market Conduct Rules also propose deadlines for processing new insurance applications.
Applications for new insurance policies would have to be processed within seven days.
Life insurance policy documents would need to be issued within 20 days.
For policies sold through digital channels, the proposed deadline would be significantly shorter, with documents required to be issued within three days.
The shorter digital timeline reflects the growing use of online platforms for purchasing insurance products.
New Rules Proposed For Motor Insurance
The SECP has also proposed additional consumer protections for motor insurance policyholders.
Insurance companies would be required to inform customers about the vehicle’s current market value and explain the implications of both over-insurance and under-insurance.
The requirement could help customers better understand the level of coverage they are purchasing and the potential consequences when the insured value differs significantly from the vehicle’s actual market value.
The draft rules also state that approved repairs under motor insurance claims should generally be completed within 15 days.
This could help reduce lengthy repair delays for policyholders whose vehicles have been damaged in accidents.
Right To Cancel Non-Life Policies
Another proposed consumer protection would give non-life insurance policyholders the right to cancel their policies without providing a reason.
The provision would give consumers greater flexibility after purchasing a policy and strengthen their ability to exit insurance arrangements where they no longer wish to continue coverage.
The proposed framework broadly focuses on improving transparency, speeding up claims and reducing practices that can create unnecessary difficulties for policyholders.
Insurers Could Face Rs1m Fine
The SECP has proposed financial penalties for companies that violate the new rules.
A violation could result in a fine of up to Rs1 million.
For continued violations, insurers could face an additional penalty of up to Rs10,000 per day.
The penalties are designed to encourage insurance companies to comply with the proposed deadlines and consumer-protection requirements.
However, the rules are still in the consultation stage and could be amended before final approval.
SECP Seeks Public Feedback
The SECP has invited comments, suggestions and objections from the public and relevant stakeholders on the draft Market Conduct Rules 2026.
Stakeholders have 30 days to submit their feedback.
Following the consultation process, the proposed rules will be presented to the SECP Policy Board for consideration and approval.
If approved, the framework would introduce a more structured set of obligations for insurers when dealing with individual policyholders.
The proposed measures could particularly benefit consumers who face delays in claim decisions, payments, hospital discharge approvals or policy documentation.