SECP ceases guarantee business of the United Insurance
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
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
14 hours ago
- Business Recorder
Private Fund Regulations, 2015: SECP proposes significant amendments
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed significant amendments to the Private Fund Regulations, 2015. The SECP has published a Consultation Paper, inviting comments from the public and all relevant stakeholders. The proposed amendments introduce a more structured and globally aligned approach to private fund regulation. Key changes include streamlined terminology, with the consolidation of Private Equity and Venture Capital under a unified 'Private Fund' framework, along with clearly defined subtypes aligned with international classifications. The amendments also expand investor eligibility by introducing income-based thresholds and formally defining Qualified Institutional Buyers (QIBs) to broaden access while maintaining investor protection. Additionally, governance enhancements feature strengthened roles and responsibilities for trustees and fund managers, alongside the introduction of formal exit strategy frameworks and defined fund termination protocols. As part of its inclusive and transparent consultative process, the first stakeholder consultation session was successfully held in Islamabad, with participation from industry representatives, fund managers, legal advisors, and other stakeholders. The session provided a valuable platform for discussion, feedback, and collaboration. To ensure broad-based input, two additional sessions are scheduled to be held in Lahore and Karachi in the coming week. The SECP encourages all relevant stakeholders to share their views on the proposed amendments by August 12, 2025. The Consultation Paper is available on the official SECP website. Copyright Business Recorder, 2025
Business Recorder
14 hours ago
- Business Recorder
‘Money laundering': Rs111bn penalty slapped on 13 solar firms
KARACHI: The Customs Adjudication Authority has imposed a crushing Rs 111 billion penalty against 13 fraudulent solar panel import companies involved in an elaborate money laundering operation that funnelled Rs 120 billion abroad through systematic over-invoicing. The landmark verdict, delivered by Dr Erum Zahra of the Customs Adjudication Authority, exposes a sophisticated network of shell companies that exploited banking loopholes to orchestrate one of the country's most significant trade-based money laundering schemes. The case has sent shockwaves through Pakistan's trade and enforcement sectors as authorities grapple with the scale of financial fraud that has been uncovered. The investigation revealed that all 13 companies were nothing more than paper entities with dummy proprietors, created specifically to launder illicit funds through the legitimate-appearing solar panel import business. The companies collectively received Rs 140 billion in bank deposits, with a staggering Rs 45 billion deposited in cash despite having no traceable business operations or physical presence. The largest penalties were imposed on four companies: Rs 53 billion, Rs 21 billion, Rs 16 billion, and Rs 8.6 billion, respectively. The fraud's mechanics were straightforward yet devastating: solar panels worth Rs 120 billion were imported at inflated prices, then sold locally for just Rs 85 billion through fictitious transactions using fake buyer names. The Rs 35 billion discrepancy confirmed systematic over-invoicing designed to facilitate massive foreign remittances under the guise of legitimate trade. The case has drawn attention from the highest levels of government, with the Prime Minister's Office establishing a high-powered investigation committee to probe the institutional failures that enabled such widespread fraud. The inquiry spans multiple agencies, including banks, the Securities and Exchange Commission of Pakistan (SECP), Customs, Inland Revenue Service (IRS), Financial Monitoring Unit (FMU), and law enforcement bodies. The Post Clearance Audit (PCA), South has filed 13 FIRs implicating 45 individuals, including the purported company owners and facilitators. Despite multiple hearing notices, none of the accused appeared before the adjudicating authority, prompting Dr Zahra to impose not only the record Rs 111 billion in financial penalties but also Rs 45 million in personal penalties. Beyond the penalties, authorities have confiscated 327 blocked containers of solar panels at various ports belonging to the said companies, official sources said, and added that the government was expecting to recover Rs 1.5 billion through the public auction of these seized goods. 'While the adjudication order is a landmark, the next challenge for Customs authorities and federal agencies is to enforce recovery of the Rs 111 billion in penalties and confiscate properties and assets acquired by the 45 accused individuals through illicit proceeds. The trail of money stretches across both public and private institutions, and officials are preparing to trace, freeze, and confiscate all identifiable assets tied to this vast laundering network,' they said. This case represents a watershed moment for Pakistan's trade oversight mechanisms. The systematic exploitation of banking regulations and the creation of fictitious transaction networks highlight critical vulnerabilities in the country's financial monitoring systems. The findings of the prime minister's investigation committee are expected to trigger significant reforms in inter-agency coordination for addressing trade-based financial crimes, they added. Copyright Business Recorder, 2025
Business Recorder
a day ago
- Business Recorder
Crescent Star Insurance resumes guarantee-backed business
Crescent Star Insurance Limited (CSIL) announced on Thursday that it had resumed its guarantee business. This was shared by the company in a notice to the Pakistan Stock Exchange today. The CSIL said that the Islamabad High Court had set aside and declared void the directions issued to the company by SECP to stop/cease guarantee business. Last year, the Securities and Exchange Commission of Pakistan (SECP) ceased the guarantee business through a direction, under Section 60 of the Insurance Ordinance, 2000 (Ordinance). Crescent Star had issued guarantees amounting to Rs 229 billion without obtaining requisite collateral and any valid reinsurance arrangements. The CSIL was incorporated in Pakistan as a Public Limited Company in the year 1957, under the Companies Act, 1913, now the Companies Act, 2017. The company is engaged in providing non-life general insurance services.
