Insurer challenges regulator’s directive in court Pakistan

Pakistani insurer Crescent Star Insurance (CSI) isn’t backing down in the face of a recent directive from the Securities and Exchange Commission of Pakistan (SECP). The regulator had told CSI to stop issuing new guarantees under its Credit and Surety business, but the insurer is pushing back, saying the order is based on a misunderstanding of the rules.

The matter is now in front of the Islamabad High Court, with CSI hopeful of getting a stay order. Another insurer previously got relief from the Lahore High Court in a similar situation, so there’s precedent for a positive outcome.

CSI is standing firm in its defense of its guarantee business, pointing to its careful underwriting practices and strong reinsurance support. The company insists that SECP misinterpreted communications from reinsurers and denies any wrongdoing.

With an impressively low claim ratio of just 2.5% over the past three years, CSI argues that its guarantee business is actually one of the safest parts of its operations. The insurer sees the regulator’s directive as unfairly targeting a single area of its business that doesn’t have a major impact on its overall performance.

Despite this legal clash, CSI remains dedicated to its business principles and believes that fairness will prevail. This disagreement underscores the ongoing tensions between insurers and regulators when it comes to interpreting and applying rules for specialized insurance sectors.