Challenges And Reform In Pakistan’s Insurance Law: Toward A Fair And Transparent Claims System Through Comparative Insights From The U.S. Model

Abstract

This paper aerially reviews the Pakistan insurance settlement system in regard to legislative instruments judicial trends and the institutional apparatus. Under the Insurance Ordinance 2000 and especially in Section 118, settlement is compulsory within a period of 90 days though interpretative judicial exceptions for bona fides disputes undermine its disincentive effect. Judges have furthered the interests of the consumer through principles such as contra proferentem and equitable estoppel, but litigations is slow and costs too much when it is 5–7 years for a trial and when it is to provide dollar restitution to the injured party. Regulatory standards are implemented by the SECP through the requirements of disclosure and the operation of guidelines, but its directives had already met judicial reversals after which its procedural frailties were laid bare. The Office of the Insurance Ombudsman also acts as a parallel forum and disposes of thousands of complaints every year, yet its judgments and decisions are not binding, and the Insurance Ombudsman has no enforcement powers resulting in a lack of faith in non-judicial redress. In conjunction with low insurance penetration (<1% GDP), and low levels of financial literacy, systemic weaknesses are thus created in the market that ensure conditions are principally favorable for insurer opportunism.