SECP Proposes Reforms to Strengthen Insurance Guarantees
ISLAMABAD, (APP - UrduPoint / Pakistan Point News - 16th Sep, 2026) The Securities and Exchange Commission of Pakistan (SECP) has proposed reforms to make insurance bonds and guarantees safer, clearer, and more reliable, particularly for construction projects, government contracts, public procurement, and trade.
The proposed framework covers bid and performance bonds, mobilization advance guarantees, and customs guarantees issued by insurers. These instruments provide financial protection to government departments, project owners, and commercial entities if a contractor or business fails to meet its contractual obligations.
Key Reforms:
- Clearer Contracts: Reform proposes clearer conditional and unconditional guarantee contracts.
- Strengthened Requirements: Stronger solvency and reserving requirements, risk-based pricing, mandatory indemnification agreements, and adequate reinsurance arrangements.
- Reduced Ambiguity: Aimed at reducing contractual ambiguity, claim-settlement delays, and prolonged litigation.
- Classification of Insurance Business: Proposes classifying credit and suretyship insurance as a restricted class of insurance business, enabling closer scrutiny of insurers.
SECP Chairman Dr. Kabir Ahmed Sidhu stated that these reforms would strengthen risk management, improve contractual clarity, and enhance public confidence in insurance-backed bonds and guarantees.
The SECP has invited comments from insurers, contractors, businesses, government entities, and other stakeholders on the consultation paper, which is available on their website.