ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced a new format for insurance illustrations to make them clearer, more standardized, and to protect potential policyholders from misleading information.
Under the new directive, SRO 1088 (I)/2024, insurance companies must now follow revised guidelines for life insurance and family takaful products with savings components. These illustrations help show the benefits of long-term financial protection and savings, often lasting 5 to 20 years.
The updated rules focus on making illustrations easier to understand. They require clearer details on costs and benefits, with larger fonts and simpler formats. Companies will now provide two scenarios instead of three and remove inflation adjustments, showing only the actual amounts allocated to policyholder accounts.
This new format applies to:
- Participating policies (like with-profits endowment plans)
- Whole life plans
- Investment-linked plans
- Universal life plans
From January 1, 2025, insurers must provide illustrations in both English and Urdu. These should be clearly explained to the potential policyholders. The detailed format is available on the SECP website here.
The SECP developed these guidelines after consulting with insurance companies, the Insurance Association of Pakistan, and the Pakistan Society of Actuaries.
