FEEDBACK TO SECP ON SURVIVAL OF LOSS ADJUSTING DUE TO INHOUSE SURVEY BY THE INSURERS - DT.29-04-2021

Respected Sir,

??????????????? With Reference to above mentioned subject, we would like to submit our humble suggestions/observations/feedbacks in form of written presentation for your kind consideration.

We, the Insurance Surveyors & Loss Adjusters have been granted License to conduct survey by M/s S.E.C.P. Insurance Division as per relevant Insurance Rules, 2017 and its subsequent amendments.

In Insurance Ordinance, 2000, the term “Surveyor” is defined as:-

“surveyor” means a person (by whatever name called) who examines the goods, property or any interests insured under a contract of non-life insurance to express an independent opinion as to the cause, extent, location and amount of any loss incurred or claimed to be incurred under that contract; (Exhibit – A)

In light of the above, whenever any event of loss occurred under a valid Insurance Policy Contract between an Insurer [being a Public Limited Company here in Pakistan (mostly)] and the Insured (any individual / company etc.), it would need to appoint an Independent Surveyor to conduct a detailed survey of the happening and Assess/Adjust the loss.

To protect the Rights of Policy Holder, Unbiased/Impartial Survey Assignment to be conducted by an Independent Surveyor is necessary whereas if independent surveyor is not appointed and an employee of Insurer Assess/Adjust the loss it will lead to conflict of Interest Aspect.

As per prevailing Insurance Rules, 2017, to work as an Insurance Surveyor here in Pakistan one has to ensure compliance under Rule: 42 to Rule 47 (Exhibit – A1) and subsequent amendments of Insurance Rules, 2017(Exhibit – A2).

In Short, after ensuring Financially Protected & Sound Incorporated Company Setup , Minimum Academic Qualification & Professional Experience, Eligibility Criteria of Passing Surveyor’s Licensing Exams & Continuous Professional Development Certification, Physical & Mental Eligibility, Sound Character Undertaking and non involvement of Conflict of Interest the Regulator Grant a License to work as an Insurance Surveyor’s Company / Authorized Surveying Officer.

It may be noted that Surveyors / ASOs have to submit undertaking that they are not “An employee of an insurance company carrying on business in Pakistan”

And now would like to draw your kind attention to the fact that, at present some Insurers are conducting Self/In-house Surveys to settle the Claims.

?The same issue was earlier raised from different forums but so far no legal written basis in favour of Self/In-house Survey was brought in to the limelight.?

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Point - (1)

To support Self/In-house Survey conducted by Employees of Insurance Companies Rule 31. (Independent insurance survey to be conducted) sub-rule (2) of Insurance Rules, 2017 (Exhibit – R) Under sub-section (1) of Section 85 of Insurance Ordinance, 2000(Exhibit – R1) is quoted.

The said Rule & Section clearly refer to Market Conduct (Exhibit – R2) in case the Commission has reason to believe that an insurance surveyor has given a false report or has grossly over-assessed or under-assessed a loss or has made an adjustment of loss in a grossly unjust manner and by definition in Insurance Ordinance, 2000, “Commission” (Exhibit – P) means the Securities and Exchange Commission of Pakistan constituted under section 3 of the SECP Act;.? The limit of amount mentioned as “in respect of the claim lodged for the amount exceeding one hundred thousand rupees except in case of motor and casualty insurance where the amount of loss or claim is for more than fifty thousand rupees” is actually the limit above which The Commission (SECP) may direct the Insurance Company to arrange an Independent or another survey due to above said reasons. It may be noted that through Amendments in Insurance Rules, 2017, the sub-rule refer to said limit of loss amount has been omitted (Exhibit – P1).

Point - (2)??

Another reason quoted in support of Self/In-house Survey under Insurance Ordinance, 2000 is:-

Section 111. Persons permitted to act as insurance surveyors.-

Sub-section (2) Nothing in this section shall prevent -

(a) the performance in the course of his employment by an employee of an insurer of activities of the nature of insurance surveying for that insurer; or(Exhibit – R3)

?This Section and relevant sub-section clearly refer to carry out activities of the nature of insurance surveying by the employees of insurer which doesn’t mean to settle the claim on the basis of their findings.?

The purpose of this Sub-section (2) is to provide Professional / Technical Assistance to underwriters by their employees who carried out Surveyor’s like activities so that they may better understand Independent Surveyor’s Report submitted under Rule (47) of Insurance Rules , 2017 (Exhibit – R4) to ascertain their Liability , if any, on the basis of Independent Surveyor’s Opinion & Loss Assessment / Adjustment.? ?

If we consider this activity of Insurance Company’s employee as loss assessment / adjustment for settlement of claim than Definition of “Surveyor” and all related sections / rules will become debatable.

?In addition , to comply different Financial , Educational , Professional , Physical & Mental , Sound Character & Conflict of Interest Requirements, for Registration or Renewal of Registration as an Authorized Surveying Officer as per Insurance Rules, 2017, Declaration under Rule 46 (3) (d) says “the applicant is not an employee of an insurance company carrying on business in Pakistan;-” While on the Other Hand , If accepted the quoted version , Employees of Insurance Company need none of the above mentioned requirement (even some are very critical) to conduct the Survey for settlement of Insurance Claims.

?The Scope of Self / In-house Survey was clearly defined in Insurance Rules, 1958(Exhibit – Q) under Repealed Insurance Act, 1938 (Exhibit –Q1 ) but no such provision observed in the Prevailing Insurance Law.

?To strengthen the above observation, the relevant Section of Draft Insurance Bill, 2016 can be read as under:-?

171. Persons permitted to act as insurance surveyors.-

(2) Nothing in this section shall prevent -

(a) the performance in the course of his employment by an employee of an insurer of activities of the nature of insurance surveying for that insurer; or

Provided that the Commission shall through regulations, prescribe a pecuniary value limited to the amount of claim, on per policy basis, for which the employee of an insurer shall be eligible to undertake insurance surveying.

Provided further that the Commission shall through regulations also prescribe the classes of business in respect of which this clause shall apply. (Exhibit – S)

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After an overview of the whole scenario related to Self / In-house Survey conducted by the Employees of Insurers , if one may say that there are some provisions which lead to In-house Survey by the Insurers and Surveyors fraternity is unaware of this interpretation of the certain Sections of the Law / Rules than , a clear verdict by the Regulator as per the existing law is requested.

In case the regulator may decide that there are no provisions for Self / In-house Survey than we request to take necessary action as may be required by law.

As per existing stagnant economic condition Volume of Insurance Surveys has been reduced a significant number and due to Self/In-house Survey practice, the situation become more vulnerable.

For Survival of Loss Adjusting Profession , an immediate action by the Regulator in this regard is requested.