The Securities and Exchange Commission of Pakistan (SECP) has put the brakes on the guarantee business operations of United Insurance Company of Pakistan Limited, citing regulatory breaches and alleged mismanagement of guarantee claims. This move, effective immediately as of May 20, 2025, follows a lengthy legal and regulatory tussle that has rattled the insurance sector.
SECP’s Bold Step Against United Insurance
The SECP issued a formal directive under section 60 of the Insurance Ordinance, 2000, officially stopping United Insurance from continuing its guarantee business. This wasn’t a snap decision. Beforehand, the regulator had sent a show-cause notice to United Insurance, questioning its handling of guarantee claims. The company fought back, obtaining a stay order from the Lahore High Court in early 2024. But after more than a year, that legal shield was lifted in April 2025 when the court dismissed United Insurance’s petition, calling it baseless.
The controversy centers on United Insurance’s apparent refusal to encash called guarantees. This wasn’t a one-off slip. Over time, guarantees worth a staggering Rs2.2 billion had piled up unpaid by the end of 2023. The complaints kept coming in — an additional Rs822 million worth of claims during 2024 and 2025, piling pressure on the company and regulators alike.
Allegations of False Statements and Non-Compliance
What complicates matters is the SECP’s claim that United Insurance made materially false statements during the investigation. Specifically, the insurer allegedly misled regulators about settling a guarantee worth about Rs1 billion. This particular issue is under separate scrutiny, with potential penalties and further actions looming.
Despite repeated hearings and chances to comply with regulations, United Insurance apparently failed to meet the standards required to continue operating in the guarantee business. This persistent non-compliance, combined with mounting complaints and alleged deception, forced the regulator’s hand.
What This Means for Policyholders and the Insurance Sector
SECP’s move aims to protect both policyholders and guarantee holders who have been left hanging by United Insurance’s actions. The regulator wants to ensure public trust in the insurance sector remains intact — a crucial task given the financial stakes involved.
United Insurance has been barred from issuing any new guarantees or extending existing ones. However, it still must honor previously issued guarantees when they mature. SECP is keen to make sure that, despite the freeze on new business, obligations already on the books don’t fall through the cracks.
The Bigger Picture: Why It Matters
This crackdown shines a spotlight on the risks lurking in Pakistan’s insurance sector, especially around guarantee business practices. Insurance isn’t just about policies and premiums; it’s about trust. When a company allegedly ignores claims or misrepresents facts, the ripple effects can shake confidence across the market.
The SECP’s decisive action signals a tougher stance on firms that don’t toe the line. But it also raises questions: How many more insurers are quietly struggling? What protections are in place for consumers?
For United Insurance, this is a serious blow. The company faces an uphill battle to rebuild its reputation and prove it can comply with regulations. And for policyholders caught in the middle, it’s a waiting game — hoping their claims will eventually be paid.
One can’t help but wonder if this will spark wider reforms in the sector or if it’s just another episode in an ongoing saga of regulatory challenges.
