ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has ceased the guarantee business of The United Insurance Company of Pakistan Limited, following a series of regulatory violations and unpaid guarantee claims amounting to billions of rupees.
In a decisive move, SECP action against United Insurance was taken through a Direction issued on May 20, 2025, under Section 60 of the Insurance Ordinance, 2000. This follows a detailed investigation and legal proceedings over serious compliance issues involving the insurance company.
Before this directive, United Insurance had received a show-cause notice but secured a stay order from the Lahore High Court on February 21, 2024. However, on April 10, 2025, the Court dismissed the petition filed by United Insurance, deeming it meritless.
United Insurance had consistently refused to encash called guarantees on various pretexts, leading to a staggering accumulation of guarantees worth Rs2.2 billion by December 2023. Additionally, the SECP received complaints totalling Rs822 million in 2024 and 2025 regarding the company’s continued failure to honour its obligations.
Despite being granted multiple hearings, the company failed to demonstrate compliance with the regulatory requirements necessary to conduct guarantee business. More alarmingly, United Insurance was found to have made materially false statements during SECP proceedings regarding the settlement of a guarantee worth approximately Rs1 billion. This issue will be pursued separately under the relevant legal provisions.
SECP Moves to Restore Trust and Enforce Compliance
In light of these violations, SECP action against United Insurance includes an immediate ban on issuing new guarantees or renewing existing ones. The company has been directed to fulfill its obligations for all previously issued guarantees as they become due.
SECP stated the move was necessary to protect the interests of policy and guarantee holders and to uphold public trust in Pakistan’s insurance sector. United Insurance retains the right to request cancellation or modification of the Direction, but only after full regulatory compliance, including acquiring proper collateral and settling all outstanding claims.
In parallel with this enforcement action, SECP has continued its consumer protection efforts, resolving over 3,000 complaints since July 1, 2024. These efforts have led to the recovery of Rs1,300 million in claims for policyholders. The Commission’s proactive approach is part of its broader mandate to ensure regulatory compliance and restore confidence in the insurance industry.
