Lahore: An insurance company’s attempt to challenge the Securities and Exchange Commission of Pakistan’s (SECP) authority to handle disputes between insurers and policyholders has been dismissed.

The case began when a policyholder approached the SECP, alleging the company had failed to inform him that the cash surrender value of Rs460,000, displayed in an illustration, was a software error. The error only came to light upon the policy’s maturity, leaving the policyholder unaware of the corrected cash surrender value of Rs282,194.

For ten years, the policyholder continued paying premiums without knowledge of the reduced value. Cash surrender value refers to the amount a policyholder can claim if they cancel a permanent life insurance policy or annuity before maturity. It is calculated as the cash value minus any applicable fees or loans.

The policyholder escalated the matter to the Commissioner Insurance, who directed the company to compensate the financial loss and imposed a penalty.

The insurance company contested the decision, arguing that the SECP is barred by the Insurance Ordinance from adjudicating disputes between insurers and policyholders. They claimed that such cases should be forwarded to the Insurance Ombudsman or resolved by the companies themselves, based on prior practices.

However, the SECP maintained that the Ordinance’s preamble empowers it to protect policyholder interests. It cited provisions allowing the issuance of directives to insurance companies, affirming its jurisdiction in the matter.

The appellate forum dismissed the insurer’s claims, stating their interpretation of the Ordinance was flawed. The ruling reinforced the SECP’s authority to act in the best interest of policyholders and ensure compliance by insurance companies.