SECP proposes mandatory timelines for insurance claims

The Securities and Exchange Commission (SECP) has introduced proposed draft Market Conduct Rules 2026 to enhance the insurance sector in the country. These regulations aim to protect consumers and mitigate delays in the industry. The draft rules will only apply to individual insurance policies.

Under the proposed framework, life insurance claims must be decided within 20 days of receiving necessary documents. Motor insurance claims should be resolved in five days, and other non-life insurance claims within seven days. Once approved, insurers must make payment within seven days. For health insurance claims, in-patient cases need to be settled within 20 days, while hospital discharge authorization should be provided within three hours, and patients cannot be denied discharge due to insurer delays.

The draft rules also seek to reduce the documentation burden on policyholders. Insurers can request only relevant documents for claim processing. Additionally, insurers must publish data on settled, rejected, and pending claims on their websites, including the percentage of claims pending for over a year. The proposed framework introduces timelines for issuing insurance policies; new applications must be processed within seven days, while life insurance policy documents should be issued within 20 days, and motor insurance policies sold digitally within 3 days.

Insurers must disclose the current market value of the vehicle to policyholders and explain the implications of over- and under-insurance for motor insurance. Approved motor insurance repairs must be completed within 15 days. The draft rules also grant non-life insurance policyholders the right to cancel a policy without providing a reason.

Breaching these rules could result in fines of up to Rs1 million, with additional fines of up to Rs10,000 per day for continued violations. The SECP has invited public proposals and objections within 30 days. Upon completing the consultation process, the proposed rules will be presented to the SECP Policy Board for approval.