The Securities and Exchange Commission of Pakistan (SECP) has issued the draft Actuarial Valuation Rules 2025 for public consultation, marking a significant step toward modernizing actuarial practices across the insurance and Takaful sectors. The proposed rules are part of the regulator’s broader agenda to build a stronger, more competitive insurance industry under its five-year strategic plan, “Journey to an Insured Pakistan.”
According to the SECP, the new rules will apply to both life and non-life insurance companies, offering a comprehensive framework for the valuation of insurance contract assets and liabilities. These rules were developed in consultation with the Pakistan Society of Actuaries (PSoA) and draw on global standards, including the Core Principles of the International Association of Insurance Supervisors (IAIS). By incorporating international best practices, the SECP aims to introduce consistency, reliability, and transparency in actuarial valuations while also paving the way for the adoption of risk-based capital and supervisory regimes.
The SECP emphasized that the draft rules are not an isolated development but rather part of a larger effort to bring structural reforms to the insurance sector. “Developing a vibrant and sustainable insurance sector is a key focus of our five-year strategic plan. We are committed to ensuring a level playing field, promoting competition, and meeting the highest international standards,” the Commission’s chairperson stated while highlighting the purpose of the new framework.
Among the key provisions of the draft rules is the introduction of gross premium valuation for long-term insurance and Takaful businesses. This approach allows insurers to assess future policyholder liabilities in a more precise and forward-looking manner. In addition, the rules propose updated methodologies for premium and claims reserving in short-term insurance, designed to improve financial resilience and ensure that reserves accurately reflect potential obligations.
Another important aspect of the draft framework is the adoption of principle-based actuarial assumptions. By moving away from rigid formulas and embracing principles, actuaries will have the flexibility to account for diverse market conditions, while still adhering to consistent standards. This approach is expected to improve the accuracy of valuations and reduce risks stemming from outdated or overly simplistic assumptions.
The SECP has also placed emphasis on improving data quality and standardizing actuarial submissions. With a growing need for robust, transparent reporting, the new rules encourage insurers and Takaful operators to adopt market-consistent reserving practices. This is seen as a critical measure to foster investor confidence, protect policyholders, and promote a healthy competitive environment in the sector.
Industry stakeholders have been invited to provide feedback on the draft rules before they are finalized. The SECP hopes that this consultative approach will ensure that the framework is both practical for insurers and aligned with international benchmarks. The regulator’s long-term vision remains centered on creating a sustainable ecosystem where insurance plays a larger role in financial inclusion and risk protection for individuals and businesses across Pakistan.
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