As the awareness of terrorism in the Middle East grew amongst businesses operating in the region, many foreign and domestic investors began to flee several countries in the area hoping to escape costly losses as the result of attacks. Pakistan was particularly impacted by the exodus of businesses. Over the years, however, the Exchange Commission of Pakistan (SECP) has been working to attract investors to the country. One of the ways the commission aims to accomplish this goal is to introduce a new insurance pool designed specifically with terrorism risk in mind.
The SECP has announced the development of the Terrorism Insurance Pool. The program is designed to absorb the risk posed by the unpredictable nature of terrorism attacks and compensate for the damages caused by such attacks. The SECP believes that he program will improve the confidence of foreign investors by providing them with protections against the more dangerous aspects of doing business in the region. Currently, the program will provide $10 million worth of insurance coverage, but this amount may be increased depending upon how investors respond.
Insurers participating in the program will be able to write policies according to the needs of the market as determined by the SECP’s Pool Claim Management Committee. Rates will be pre-determined and insurers will be able to requests rate increases every year. The Pool Claim Management Committee will issue quarterly reports concerning the risk and exposure for each insurer participating in the program.