Law:

Section:

Insurance Ordinance (XXXIX of 2000)-------Ss. 32(2)(k) & 156---Inclusion of deposits received as security against guarantees as admissible assets---Insurance---Company in its statement of assets for solvency purposes, had included the deposits received as security against guarantees as admissible assets in violation of S.32(2)(k) of Insurance Ordinance, 2000---Directors of the company, in addition to the day to day running of the company, and the management of its business, also had some 'fiduciary' duties i.e., duties held in trust and some wider duties imposed by statute; and breach of those statutory duties, would be a higher standard of accountability which required them to be vigilant and perform their duties with due care---Directors, in the present case, had failed to perform their duties with due care and prudence---Directors were supposed to be well aware of their legal obligations as required by the Insurance Ordinance, 2000 under S.32(3), and were required to ensure compliance with the clear wordings of S.32(2) of Insurance Ordinance, 2000---Legitimate inference was that the default was committed---Commission in exercise of powers conferred under S.156 of Insurance Ordinance, 2000 instead of imposing the maximum penalty, imposed a nominal fine of Rupees one hundred thousand only---Company was issued a stern warning that in case of similar non-compliance in future, strong action would be taken against it. ORDER (Under section 32(2) read with section 156 of the Insurance Ordinance, 2000) SHAHID NASIM, EXECUTIVE DIRECTOR (INSURANCE).---This Order shall dispose of the proceedings initiated against Messrs EFU General Insurance Limited (hereinafter referred to as ("the Company") for making a default in complying with the requirements of section 32(2) of the Insurance Ordinance, 2000 ("the Ordinance"). Background Facts The relevant facts for the disposal of this case are briefly stated as under:-- 1. Subsection (2) of section 32 of the Ordinance, states that:-- "(2) For the purposes of this Part, subject to subsection (1), the following are not admissible assets: ....... (k) amounts available to the insurer under guarantees; ........" 2. It was observed…

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