Islamabad: The Securities and Exchange Commission of Pakistan (SECP) has halted the guarantee business of The United Insurance Company of Pakistan Limited. This action, executed through a directive on May 20, 2025, comes under the provisions of section 60 of the Insurance Ordinance, 2000.

Prior to this directive, the company was issued a show-cause notice. After obtaining a stay order from the Lahore High Court on February 21, 2024, the court dismissed United Insurance’s petition on April 10, 2025, deeming it without merit.

The SECP’s decision follows United Insurance’s consistent refusal to honor called guarantees, which led to an accumulation of guarantees worth Rs. 2.2 billion by the end of 2023. Additional complaints regarding non-encashment of guarantees totaling Rs. 822 million were received over 2024 and 2025.

Despite multiple hearings, United Insurance did not meet regulatory requirements necessary to continue its guarantee operations. Moreover, the company made a materially false statement to the SECP about settling a guarantee valued at approximately Rs. 1 billion, a matter that the SECP plans to address separately.

To safeguard the interests of policyholders and guarantee holders, and to uphold public confidence in the insurance sector, the SECP has prohibited United Insurance from issuing new guarantees and renewing existing ones. The company is instructed to fulfill obligations on already issued guarantees as they come due.

United Insurance retains the right to request cancellation or modification of the directive, contingent upon compliance with the regulatory framework, including securing proper collateral and settling all unpaid guarantees.

Since July 1, 2024, SECP has addressed over 3,000 complaints, recovering Rs. 1,300 million for policyholders. The commission’s proactive measures aim to improve compliance and strengthen public trust in the insurance industry.