MoC to seek cabinet approval for Insurance Act 2026 to replace outdated law

The Ministry of Commerce is set to seek federal cabinet approval for the proposed Insurance Act 2026, which aims to replace the existing Insurance Ordinance 2000 and align Pakistan’s insurance sector with modern international standards, Business Recorder reported. 

Officials said the draft law has already been approved by the Cabinet Committee on Disposal of Legislative Cases (CCLC) after being vetted by the Ministry of Law and Justice, and will now be presented to the cabinet before being introduced in parliament.

The current legal framework, based on the Insurance Ordinance 2000, replaced most provisions of the Insurance Act 1938 but has not kept pace with developments in the sector over the past two decades. Authorities said a new legislative framework is required to address regulatory gaps and evolving market needs.

The proposed law is designed to simplify the legal structure by shifting detailed provisions to subsidiary regulations, while strengthening supervision, enforcement and dispute resolution mechanisms. It also seeks to promote competition by allowing greater participation of international insurers and improving market access.

Policy reforms for the insurance sector were endorsed by the Special Investment Facilitation Council in February 2024, including corporatisation and divestment of state-owned insurance firms and alignment with global regulatory practices.

The Ministry of Commerce developed the draft after consultations with stakeholders, including the Securities and Exchange Commission of Pakistan, Ministry of Finance, Insurance Association of Pakistan and public sector entities.

Earlier, the Ministry of Law and Justice advised that instead of amending the existing ordinance, a new law should be drafted due to the scale of proposed changes. Following this, a fresh draft was prepared and submitted for vetting in February 2026, which was cleared in March.

Under the Rules of Business 1973, the draft legislation is required to be approved by the federal cabinet before being tabled in the National Assembly or Senate for further legislative process.