Law: Securities and Exchange Commission of Pakistan Act, (XLII of 1997)

Section: 20

Securities and Exchange Commission of Pakistan Act (XLII of 1997)---Ss. 20(4)(r) & 33---Insurance Ordinance (XXXIX of 2000), Ss. 2(xxvii), (ii), 11(1)(d), 41 59-A & 156---Issuance of different policies on a single risk---Imposition of penalty---Different policies were issued by the insurance company on a single risk---Company had retained multiple retentions of premium per risk instead of single retention which was contrary to the terms and conditions of its reinsurance treaty---Company carried a risk of premature cancellation of its reinsurance treaty---Executive Director (Insurance) of the Commission, being dissatisfied with the response of the company to show-cause notice, vide impugned order imposed a penalty of Rs.500,000 on the company---Securities and Exchange Commission of Pakistan had been given powers under S.20(4)(r) of Securities and Exchange Commission of Pakistan Act, 1997, to regulate the contract of insurance including reinsurance---Commission had been entrusted with powers to oversee reinsurance arrangements outlined in S.41 of Insurance Ordinance, 2000; firstly, the reinsurance treaties were to be submitted to the Commission by any insurer in terms of S.41(2) of Insurance Ordinance, 2000; secondly, the insurer concerned would submit to the Commission particulars of alteration in the treaty, or new treaty entered into in terms of S.41(3) of Insurance Ordinance, 2000---Finally the Commission could direct the insurer to make modification in its reinsurance arrangements in terms of S. 41(4) of Insurance Ordinance, 2000---Section 41(1) of Insurance Ordinance, 2000, had given the prerogative to the Directors of a company to decide as to whether or not the reinsurance arrangements were adequate in order to ensure continuing compliance by the insurer with the provisions of Insurance Ordinance, 2000 relating to solvency---No violation of S.41 of Insurance Ordinance, 2000 having taken place in the case, but the compliance of reinsurance treaty could not be left at the sole discretion of the Directors of the company---When the Directors would transgress their powers, Commission which had been entrusted with the powers to oversee the contract of…

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