The Securities and Exchange Commission of Pakistan (SECP) has issued S.R.O. 458(I)/2025, amending the Code of Corporate Governance for Insurers, 2016. This directive marks a new chapter in the governance and operational integrity of the insurance sector in Pakistan.
All insurance companies are now required to establish a dedicated actuarial function that aligns with the nature, size, and complexity of their business operations.
By mandating an internal actuarial function, SECP is aligning Pakistan’s insurance sector with international best practices. The move enhances transparency, risk mitigation, and policyholder protection.
Requirements for the Actuarial Function
The actuarial function must ensure that all data used for investigations is:
- Accurate
- Appropriate
- Complete
- Comprehensive
Data quality forms the foundation of all actuarial models, assumptions, and projections. Adherence to international actuarial standards is mandatory.
- Accurate liability valuations
- Compliance with solvency thresholds under the Insurance Ordinance, 2000
This requirement directly supports financial resilience and sustainability of insurance companies operating in volatile market conditions.
The actuarial function shall conduct regular experience studies, covering:
- Demographic trends
- Macroeconomic changes
- Expense analysis
These studies help refine actuarial assumptions and validate whether current pricing policies align with underwriting and claims management frameworks.
Reinsurance Evaluation and Investment Advisory
The actuarial team will assess the adequacy of reinsurance programs by considering:
- Business size and nature
- Risk appetite
- Solvency position
This analysis ensures insurers remain protected against large or unexpected losses, thereby safeguarding policyholders’ interests.
- Asset Liability Management (ALM)
- Matching assets to future policyholder obligations
- Sufficiency of future income streams
This is particularly crucial for life insurers, where long-term liabilities need to be matched with stable, low-risk investments.
In the case of life insurers, the actuarial function must work closely with the appointed actuary to fulfill duties outlined in the Insurance Ordinance, 2000, and accompanying rules. This ensures a harmonized actuarial approach across all strategic and operational levels of the organization.
Reporting Structure and Independence
- Report directly to the CEO
- Have unfettered access to the Board of Directors
- Submit findings and insights on a regular basis
To ensure independence, the actuarial function must not engage in activities that could result in conflicts of interest. This separation is vital for unbiased actuarial analysis and recommendations.
This landmark amendment by SECP is expected to strengthen corporate governance, boost investor confidence, and ensure greater protection for policyholders. Insurers must now integrate the actuarial function as a strategic advisory unit, not just a regulatory formality.
- Risk pricing will become more precise
- Reserve adequacy will be closely monitored
- Long-term sustainability of insurance operations will improve
It is also a wake-up call for insurers to invest in actuarial talent, upgrade their data infrastructure, and promote transparent financial practices.
