CHAPTER
XV
INSURANCE
BUSINESS
-
General.
-
Issue
of Life Policies to Pakistanis.
-
Issue
of Policies to Foreigners residing in Pakistan.
-
Issue
of Foreign Currency Policies.
-
Premia
on Rupee Policies held by Pakistanis Resident abroad.
-
Assignment.
-
Payment
of Claims - Rupee Policies.
-
Payment
of Claims - Foreign Currency Policies.
-
Export
of Policies.
-
Remittance
of Premia on Foreign Currency Policies of Pakistanis.
-
Marine
Policies - Exports.
-
Marine
Policies - Imports.
-
Marine
Policies - Shipment between two countries outside Pakistan.
-
Marine
Policies - Coastal Shipments.
-
Non-Marine
Risks Excluding Life.
-
Premia
Collection - Rupee Policies.
-
Premia
Collection - Foreign Currency Policies.
-
Method
of Settlement of Claims (Non-Life).
-
Claims
under Foreign Currency Policies covering Imports under Aid/Loan.
-
Claims
in respect of Marine Policies covering Exports.
-
Claims
under Foreign Currency Policies other than Marine.
-
Reinsurance
Business.
-
Reinsurance
- Life.
-
Remittance
under Reinsurance Business.
-
Foreign
Currency Accounts of Pakistani Insurance Companies.
-
Transfer
of surplus Funds of Marine and General Business by Foreign
Insurance Companies.
1.
General.
The
Exchange regulations governing insurance business entered into
in Pakistan are set out in this chapter. Branches and agencies
in Pakistan of insurance companies whose head offices are situated
abroad are, for Exchange purposes, subject to the same regulations
as insurance companies registered in Pakistan.
2.
Issue of Life Policies to Pakistanis.
Insurance
policies on the lives of Pakistanis resident in Pakistan can be
issued only in Rupees.
3.
Issue of Policies to Foreigners residing in Pakistan.
Policies
on the lives of foreign nationals resident in Pakistan may be
issued in Rupees. State Bank will permit conversion of such Rupee
policies into foreign currency policies and consequential transfer
of actuarial reserves as also remittance of maturity proceeds,
as the case may be, provided the premia in Rupees is paid by them
out of their genuine savings which are otherwise remittable. Similar
facility is also available to diplomats accredited to Pakistan
and expatriate employees of international organizations provided
premia in Rupees is paid by them out of their convertible Rupee
accounts.
4.
Issue of Foreign Currency Policies.
Foreign
currency policies may be issued on the lives of foreign nationals
where premia is paid by them in foreign exchange or out of remittable
Rupee funds of the policy holders as laid down in paragraph 17
ibid. Foreign currency policies can also be issued on the lives
of Pakistan nationals domiciled abroad provided premium is paid
in foreign exchange only.
5.
Premia on Rupee Policies held by Pakistanis Resident abroad.
Premia
on Rupee life policies held by Pakistanis resident abroad must
be received either by remittance from abroad or out of Rupees
held in the non-resident account of the policy holder.
6.
Assignment.
Rupee
Policies cannot be assigned by a resident in Pakistan to a non-resident
except with the prior approval of the State Bank. Foreign currency
policies held by foreign nationals may, however, be assigned to
non-residents without State Bank's approval.
7.
Payment of Claims – Rupee Policies.
The
maturity proceeds or surrender value of Rupee policies will be
paid in Rupees only. In the case of foreign nationals, the remittance
of maturity proceeds/surrender value of Rupee policies held by
them, can be allowed only with the prior approval of the State
Bank as indicated in preceding paragraph 3. Application for this
purpose should be made in the prescribed form (Appendix V-51).
8.
Payment of Claims – Foreign Currency Policies.
The
maturity proceeds or surrender value of foreign currency policies
held by foreign nationals may be paid in rupees or in the currency
of the policy. Payment in foreign currency will be made with the
prior approval of the State Bank.
9.
Export of Policies.
Life
and Endowment policies fall within the definition of securities
and cannot be taken or sent out of Pakistan without the prior
approval of the State Bank. Application for export of life policies
should be made to the State Bank giving full description of the
policy and reasons for its export.
10.
Remittance of Premia on Foreign Currency Policies of Pakistanis.
Pakistanis,
who had taken foreign currency policies while residing abroad,
are required to declare them to the State Bank on their return
to Pakistan. In this connection, reference is invited to the instructions
contained in para 15 of Chapter XX. Normally in such cases,
the policy holders will be required to repatriate the surrender
value of the policy to Pakistan. However, in cases where the policy
is to mature within one year or so, the State Bank will consider
allowing remittance of premia subject to the condition that the
proceeds of the policy on maturity will be received in Pakistan
through banking channel. Application for the purpose should be
made in the prescribed form (Appendix V-52).
11.
Marine Policies – Exports.
Exports
from Pakistan can be insured by the exporters only if the goods
are shipped on C.I.F. basis. In respect of shipment on F.O.B.
or C & F basis insurance will be arranged by the overseas
buyers. Exporters can take out policies only from companies operating
in Pakistan, which can be expressed in Rupees or in foreign currency.
12. Marine Policies – Imports.
i)
Imports into Pakistan are required compulsorily to be insured
in Pakistan with companies operating in Pakistan. Imports can
thus be made only on C & F or F.O.B. basis. It is not permissible
to issue marine policies covering imports into the country in
currencies other than Rupees.
ii)
As an exception to the above general rule:
a)
National Insurance Company Limited is authorised to issue
foreign currency policies against imports financed by P.I.C.I.C./I.D.B.P.
and directly by the loan-giving agencies.
b)
Sub-authorisations issued under U.S. AID Programme on C.I.F.
basis can, at the option of the importers, be utilized for imports
from U.S.A. on C.I.F. basis by arranging insurance in the U.S.A.
13.
Marine Policies – Shipment between two countries outside
Pakistan.
Shipments
between two countries outside Pakistan financed by a person or
firm in Pakistan with the permission of the State Bank, can be
insured in Rupees or in foreign currency.
14.
Marine Policies – Coastal Shipments.
Coastal
shipments between places in Pakistan can be insured in Rupees
only.
15.
Non-Marine Risks Excluding Life.
i)
Insurance cover on non-marine risks (excluding life) inside
Pakistan can be issued in Rupees only. Nothing in this paragraph
shall affect the operation of the warehouse clause in marine insurance
policies.
ii)
Insurance cover on assets outside Pakistan owned by residents
of Pakistan can be issued in Rupees or in the currency of the
country in which the assets are situated.
iii)
Insurance cover in respect of personal baggage and valuables
in transit of Pakistan nationals can be issued in Rupees only.
In respect of foreign nationals, such insurance covers can be
written in Rupees or foreign currencies. However, in cases where
foreign currency policies are issued to foreign nationals, premia
thereon can be collected in foreign exchange only.
iv)
House-holders policies can be issued in Rupees only.
v)
The issue of personal accident policies is governed by
the same conditions as those applicable to life policies.
vi)
Policies under the Workmen's Compensation Act and Merchant
Shipping Act can be issued in Rupees only.
16.
Premia Collection – Rupee Policies.
Premia
on policies issued in Rupees to non-residents can be collected
by remittance from the country in which the policy holder is resident
or out of Rupees held in his non-resident account. Insurers are
not permitted to accept payments in Rupees from resident sources.
17.
Premia Collection – Foreign Currency Policies.
Premia
on foreign currency policies issued by insurance companies in
Pakistan, in respect of foreign nationals resident in Pakistan,
can be collected out of remittable Rupee funds of the policy holder
or through a remittance received from abroad. In respect of foreign
nationals residing abroad, the premia can be collected only through
a remittance from abroad. As regards Pakistan nationals holding
foreign currency policies, premia can be collected in foreign
exchange only as laid down in paragraph 4 ibid.
18.
Method of Settlement of Claims (Non-Life).
Claims
on Rupee policies can be paid in Rupees only even in cases where
the beneficiary is a non-resident.
19. Claims under Foreign Currency Policies covering
Imports under Aid/Loan.
Claims
arising under Foreign Currency policies covering imports under
Aid/Loan can be paid by National Insurance Company Limited (NICL)
without the prior approval of the State Bank of Pakistan in foreign
currency for the replacement of goods damaged or lost in transit.
Before making payment of claims in foreign currency, the NICL
will obtain from the concerned importers an undertaking to the
following effect:
i)
The amount
of the claims will be utilized only to the extent required for
replacement of the goods damaged/lost in transit and any amount
un-utilised will be repatriated to Pakistan through the medium
of an Authorised Dealer in foreign exchange.
ii)
Documentary evidence regarding payment made to the overseas
suppliers in respect of goods purchased in replacement shall be
submitted to the State Bank.
iii)
The documents viz. Invoice relating to shipment duly endorsed
by the Authorised Dealer, Bill of Lading, Bill of Entry and Bank's
certificate showing repatriation of un-utilised amount, if any,
shall be submitted to the State Bank within 4 months from the
date of payment to the overseas suppliers.
The
National Insurance Company Limited will report the payment of
the claims in foreign currency to the State Bank through a monthly
statement showing the amount of claims, names and addresses of
the importers, number and date and value of the import licences/authorisation,
if any, against which the goods were originally shipped and names
and addresses of the overseas exporters. The statement, alongwith
the copies of claim payment advices sent to the respective importers
and relative undertaking obtained from them, should be so submitted
as to reach the concerned area office of the Exchange Policy Department
by the 7th of the following month.
20.
Claims in respect of Marine Policies covering Exports.
i)
Claims arising under the policies covering exports from
Pakistan are payable to the shippers in cases where the proceeds
have not been realised from the overseas importers. Where the
payments have been received by the shippers, the claim can be
paid to the overseas importers.
ii)
Remittance of these claims by Pakistani insurance companies
to foreign importers may be allowed by the Authorised Dealers
on submission of applications accompanied by the following documents:
a)
Application on Form
'M' alongwith the declaration in the prescribed form
(Appendix V-53).
b)
Claim Note.
c)
Policy in original. Duplicate acceptable where original
is retained by the Customs authority of the importing country
and/or lost and indemnity in lieu of the original.
d)
Invoice on CIF basis relating to the shipment.
e)
Bill of Lading/Airway Bill/Postal Receipt relating to the
shipment.
f)
Survey Report/Short Landing Certificate/General Average
Adjustment/Short Contents Certificate/No Survey Loss Certificate.
Survey is not necessary if claim is not likely to exceed U.S.
$100/-.
g)
Foreign bank's certificate to the effect that the proceeds
relating to the shipment against which claim is made have already
been remitted to Pakistan (except in case of general average claim
payable to adjusters).
iii)
To facilitate prompt payment to overseas claimants, the
State Bank will consider requests from Pakistani insurance companies
for settlement of such claims by their overseas settling agents
through a system of revolving letter of credit. In cases where
such permission is given, claims would be scrutinized by the overseas
settling agents on the basis of the documents indicated at serial
No. (b) to (g) in the preceding sub-paragraph and payments made
through revolving letter of credit. The claim documents both in
respect of direct remittance and remittance under letter of credit
should be submitted to the State Bank alongwith the relative Form
‘M’ while reporting the transaction in the monthly Returns for
post facto checking alongwith the declaration in the prescribed
form (Appendix
V-53).
iv)
Foreign insurance companies are required to settle claims
in respect of marine policies covering exports through their head
offices on the basis of all the above claim documents.
21.
Claims under Foreign Currency Policies other than Marine.
Claims
on foreign currency policies other than marine can be paid as
under:
i)
Where the beneficiary is a non-resident, the claim can,
with the permission of the State Bank, be paid in the currency
in which the policy is issued.
ii)
Where the beneficiary is resident in Pakistan, payment
of claim can be made in Rupees only for which prior permission
of the State Bank is not required. In case, however, the resident
beneficiary requires payment in the currency of the policy, application
for making such payment should be made to the State Bank giving
full reasons as to why he requires payment in foreign currency.
Application
for remittance of claim under (i) and (ii) above, should be made
on Form 'M' accompanied by the prescribed declaration (Appendix V-53).
22.
Reinsurance Business.
Exchange
facilities for reinsurance will be given only to branches or offices
of insurance companies in Pakistan doing business on their own
account. Such facilities will not be given to agents of non-resident
companies who book business on account of the non-resident companies.
23.
Reinsurance – Life.
Remittance
of reinsurance premia both under treaty and facultative cover
arising from the life insurance policies is not permissible except
in the following cases:
a)
Reinsurance premia on policies reinsured before 29th December,
1970.
b)
Reinsurance premia on policies issued and reinsured on
or after 25th May, 1973 for sums over Rs. 3.5 lacs in respect
of death risk only.
Remittances
in respect of (a) and (b) above will be allowed by the State Bank
in accordance with the procedure set out in the following paragraph
No. 24.
24.
Remittance under Reinsurance Business.
Permission
may be given by the Authorised Dealers for remittances in respect
of reinsurance business effected with or accepted from non-resident
companies on the insurance companies submitting to them the following
information and documents. Remittances in respect of life re-insurance
business will, in addition, be subject to conditions laid down
in the preceding paragraph 23:
i)
Remittance of premia under Facultative Reinsurance:
a)
Applications on Form
'M' accompanied by a declaration in the prescribed
form (Appendix V-54).
b)
Evidence in the nature of cover note etc., in respect of
reinsurance effected.
c)
Certificate from the Controller of Insurance to the effect
that the local market has been fully utilized before placing any
part of the risk outside the country facultatively.
ii)
Settlement of Account under Treaty Reinsurance:
a)
Application on Form
'M' accompanied by declaration in the prescribed form
(Appendix V-55).
b)
A proforma statement of account showing net balance payable/receivable
signed by the manager or an authorised officer of the applicant
company duly confirmed by the beneficiary.
c)
Proceeds Certificate in case any amount of claim has been
received in cash and the same is being accounted for through the
statement of account.
These
documents will be submitted to the State Bank with the monthly
Returns.
25.
Foreign Currency Accounts of Pakistani Insurance Companies.
Retention
of foreign currency received by Pakistani insurance companies
is not permissible except with the special permission of the State
Bank. Premia collected by them in foreign currency must, therefore,
be sold to an Authorised Dealer. There is, however, no objection
to the settlement of reinsurance accounts through the non-resident
reinsurers.
26. Transfer of surplus Funds of Marine and General
Business by Foreign Insurance Companies.
It
is the practice with foreign insurance companies, operating in
Pakistan, to settle through their head offices all claims arising
under the policies issued by them and payable to non-residents.
Similarly claims arising in Pakistan under the policies issued
by their head offices are settled by their branches in Pakistan.
To facilitate such settlements the local branches of overseas
insurance companies are allowed to transfer their surplus funds
on quarterly, half-yearly or annual basis. Companies wishing to
transfer surplus funds should make an application to the State
Bank, through the Authorised Dealer maintaining their account,
on Form 'M' supported by (i)
a no objection certificate from the Controller of Insurance, (ii)
a declaration and statement in the prescribed forms (Appendices
V-56 and V-57) signed by the manager
or an authorised officer of the remitting branch holding power
of attorney, and (iii) other requisite documents. |