ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has ceased the guarantee business of The United Insurance Company of Pakistan Limited (United Insurance) through Direction, issued on May 20, 2025, under section 60 of the Insurance Ordinance, 2000 (Ordinance). Prior to issuance of the said Direction, a Show Cause Notice was issued to United Insurance. However, a stay order was obtained on February 21, 2024 from the Honorable Lahore High Court On April 10, 2025, the Honourable Court dismissed the petition filed by United Insurance considering it without merit. SECP noted that United Insurance deliberately refused to encash called guarantees, on one pretext or the other. The unpaid called guarantees amounted to Rs. 2.2 billion, as of December 2023 and further complaints amounting to Rs 822 million regarding non-encashment of guarantees were received during year 2024 and 2025. Despite provision of various hearing opportunities. United Insurance could not demonstrate the requisite compliance with regulatory requirements to carry on guarantees business. United Insurance also made material false statement to SECP, during the proceedings, regarding settlement of one of the guarantees, amounting to approx. Rs.1 billion. The matter of false statement by United Insurance would be dealt separately by SECP in terms of the relevant provisions of Ordinance Considering the significant amount of unpaid called guarantees, to protect the interests of policy and guarantee holders of United Insurance and to maintain the trust of general public in the insurance sector, SECP was left with no option but to cease the guarantee business of United Insurance with immediate effect. In terms of the issued Direction, United Insurance has been prohibited to issue any new guarantees, not to rollover existing guarantees and to fulfil its obligations with regard to already issued guarantees as and when they become due United Insurance may approach SECP for cancellation /modification of the Direction, provided it complies 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 enhance policy holders’ confidence, SECP successfully addressed over 3000 complaints since July 01, 2024, resulting in recovery of policy holders’ claims aggregating to Rs 1,300 million. The proactive approach by SECP, is expected to enhance compliance in the insurance sector and build public trust.
