Pakistani insurer Crescent Star Insurance (CSI) has legally challenged a directive issued by the financial services regulator Securities and Exchange Commission of Pakistan (SECP). The directive had asked the insurer to halt the issuance of fresh guarantees under its Credit and Surety business.
According to a news report in the Pakistani news portal pakistantoday.com.pk the insurer has, however, asserted that the regulator’s order is based on an alleged misinterpretation of the credit and surety rules.
The matter is currently before the Islamabad High Court. The CSI in a notification sent to the Pakistan Stock Exchange, expressed the hope that it would be able to secure a stay order from the court. There is a precedent where another insurer obtained relief from the Lahore High Court in a similar case.
CSI while staunchly defending its guarantee business, has highlighted its prudent underwriting practices and the backing of facultative reinsurance arrangements. The company refuted SECP’s interpretation of reinsurer communications and denied any misrepresentation of facts.
With a low claim ratio of just 2.5% over the past three years, the insurer said its guarantee business is one of the safest segments in its portfolio. It also criticised the SECP’s directive as disproportionately targeting a single class of business that does not significantly affect its overall operations.
The insurer has said that it remains committed to its business practices and trust that justice will prevail,.
This legal confrontation highlights ongoing friction between insurers and regulators over the interpretation and application of rules governing specialised insurance segments.