The Securities and Exchange Commission of Pakistan (SECP) has issued the draft Market Conduct Rules 2026 for insurance companies for public consultation, proposing a series of requirements aimed at strengthening protection for insurance consumers and improving the timelines for processing policies and claims. The proposed framework will apply specifically to individual insurance policies and introduces mandatory deadlines for insurers to assess and settle claims, issue policy documents, process new applications and provide certain services to policyholders. The draft also sets requirements for disclosure of claims data and establishes financial penalties for insurers that fail to comply with the proposed requirements.
Under the draft rules, insurance companies will face specific deadlines for deciding different types of claims. Life insurance claims will have to be decided within 20 days of receiving all required documents, while motor insurance claims will have to be decided within five days of receiving the survey report. For other non-life insurance claims, insurers will be required to make a decision within seven days of receiving the survey report. Once an insurance claim has been approved, the insurer will be required to make the payment within seven days, establishing a separate deadline between claim approval and the actual settlement.
The proposed rules also introduce specific requirements for hospitalized health insurance claims. Such claims will have to be settled within 20 days, while approval for hospital discharge will have to be provided within three hours. The draft rules further state that patients cannot be prevented from being discharged because of delays caused by an insurance company. The requirement is intended to ensure that delays in insurance-related processing do not result in patients being kept in hospitals after they are ready to leave.
The SECP has also proposed restrictions on the documentation that insurance companies can request from claimants. Under the draft framework, insurers will only be permitted to request documents that are relevant to the claim being processed. Insurance companies will additionally be required to publish information about settled, rejected and pending claims on their websites. The published information will also have to include the proportion of claims that have remained pending for more than one year, providing policyholders and other stakeholders with greater visibility into insurers’ claims handling performance.
The proposed rules cover the issuance and processing of new insurance policies as well. Applications for new insurance policies will have to be processed within seven days. For life insurance, policy documents will have to be issued within 20 days, while policies sold through digital channels will have to be issued within three days. The shorter deadline for digitally sold policies reflects the faster processing expected through online insurance channels and establishes a specific requirement for insurers operating through digital platforms.
For motor insurance policies, the draft rules propose additional disclosure requirements for policyholders. Insurance companies will be required to inform customers about the current market value of the insured vehicle and explain the implications of both over-insurance and under-insurance. The rules also propose that approved repairs under motor insurance claims should generally be completed within 15 days, adding a time-based requirement for the repair process following approval of a claim.
The draft framework also proposes giving non-life insurance policyholders the right to cancel their policies without providing a reason. This provision would give customers greater flexibility after purchasing a policy and would form part of the broader consumer protection measures included in the proposed Market Conduct Rules 2026.
The SECP has also proposed penalties for violations of the rules. An insurer found to be in violation of the proposed requirements may face a fine of up to Rs1 million. In cases where violations continue, an additional fine of up to Rs10,000 per day may be imposed. The proposed penalties are intended to support compliance with the timelines and other requirements set out in the draft framework.
The SECP has invited comments, suggestions and objections from the public and relevant stakeholders within 30 days. The consultation process will allow insurers, policyholders and other interested parties to provide feedback on the proposed requirements before the framework is finalised. Following the completion of the consultation process, the proposed Market Conduct Rules 2026 will be presented to the SECP Policy Board for approval.
If approved, the rules would establish more defined service timelines across several areas of individual insurance, including claims processing, payments, policy issuance, health insurance discharge approvals and motor insurance repairs. The proposed framework also places greater emphasis on disclosure of claims performance and limits the documentation insurers can request from customers, marking a regulatory push towards clearer service standards and stronger policyholder protections in Pakistan’s insurance sector.
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