IDRA seeks feedback to finalise insurer resolution ordinance 2025

Staff Correspondent: The Insurance Development and Regulatory Authority (IDRA) has called for opinions from stakeholders, experts and the general public to finalise the Insurer Resolution Ordinance, 2025. The revised draft of the ordinance has been made available on the authority’s website for open review and feedback. The initiative aims to strengthen regulatory governance, enhance policyholders’ protection and bring greater financial discipline to the country’s insurance sector.

The proposed ordinance highlights the government’s intent to safeguard policyholders and restore public trust in an industry often criticised for delayed claim settlement and operational inefficiency. It seeks to empower IDRA with wider authorities concerned to intervene in the management of economically distressed insurers. Under the fresh framework, the regulator will be capable to declare failing companies insolvent and, when needed, ensure that claim is settled even through the liquidation of directors’ personal assets.

IDRA officials have said that the main objective of the ordinance is to protect policyholders’ interests by ensuring timely settlement of their claims. Several insurance companies have long struggled to meet their liabilities, making frustration among customers and diminishing the sector’s credibility. The ordinance, therefore, is designed not only to safeguard the rights of insurance clients but also to bring structural reforms that may assist stabilise struggling firms.

The draft grants the regulator the authorities concerned to remove or replace a company’s chairman, directors, or chief executive officer if the situation demands. It also permits IDRA to appoint an administrator to oversee the operations of a troubled insurer. In cases where ownership transfer becomes required, the draft outlines provisions for making short-term ‘bridge insurers’ to take control of assets and liabilities before a permanent resolution is reached. These institutions will be managed by appointed boards and executives and financed through a fund supported by domestic and global commercial institutions.

The ordinance highlights the need for a timely and organised response to issues like capital deficiency, liquidity crisis and insolvency threat that may jeopardise the stability of insurance companies. It seeks to establish a sustainable legal and administrative framework that will help preserve economic stability and avert systemic risk in the insurance market.

Beyond immediate regulatory intervention, the proposed ordinance also envisions the formation of an Insurance Sector Crisis Management Council, which will play a strategic role in managing sector-wide risks. It also includes provisions addressing voluntary liquidation, misuse of company funds and penalties for misconduct, thereby ensuring stronger answerability in the industry.