The Securities and Exchange Commission of Pakistan (SECP) held a session on Thursday for the insurance industry participants to provide an overview of the Risk-Based Capital (RBC) regime and a walk-through of the recently disseminated RBC templates.
The meeting was attended by Chief Executive Officers (CEOs), finance and risk professionals from the insurance industry. It was also attended online by actuarial representatives and accounting experts from the Pakistan Society of Actuaries and the Institute of Chartered Accountants of Pakistan, said a news release.
Commissioner Insurance Aamir Khan apprised the participants of the importance of alignment of the currently applicable solvency regime with international standards.
He informed that with the adoption of a more risk-based approach to capital and solvency requirements in the region and internationally, Pakistan is now being seen as an outlier by the global insurance industry. As part of the strategic plan, he expressed his intent to leverage the alignment of the valuation of insurance liabilities, the financial reporting under IFRS 17 and the RBC regime, which are the key priority areas of a five-year strategic plan.
Advisor Insurance at SECP Falak S.H. Soomro provided an overview of the RBC implementation journey, including the development of the concept paper in December 2022 and the RBC template shared with the industry for data analysis.
Falak informed participants that the RBC template is to assist the companies in evaluating their risk exposures, conducting risk-based capital requirements analysis (commonly referred to as Quantitative Impact Study), and completing the model-validation process.
A walk-through of the RBC templates about the technicalities and operationalities of the model was presented.
The importance of further consultations with industry to enhance the underlying work, such as parameter calibrations, comparative impact on solvency regimes and finalization of the broader framework was also highlighted.
Commissioner Insurance requested the participants to play a collaborative role in the successful implementation of the RBC regime in Pakistan and asked participants to share questions related to the RBC template for onward circulation of FAQs as a mutual effort.
