ISLAMABAD: The Ministry of Commerce (MoC) is set to overhaul rules governing the insurance sector to strengthen Pakistan’s financial system and investment climate; however, its first attempt—proposing over 200 amendments to the Insurance Ordinance has been rejected by the Cabinet Committee on the Disposal of Legislative Cases (CCLC), well-informed sources in the Law Ministry told Business Recorder . Sharing details, the sources said that on December 30, 2025, the Commerce Division briefed the CCLC, chaired by Law Minister Azam Nazir Tarar, that the Insurance Ordinance, 2000 (XXXIX of 2000) was promulgated on August 19, 2000, replacing most provisions of the Insurance Act, 1938. Over the past 25 years, Pakistan’s insurance landscape has evolved significantly, necessitating an updated legislative framework aligned with contemporary market needs and global regulatory practices. READ MORE: Minister underscores urgent need to modernize insurance sector The CCLC was informed that the Apex Committee of the Special Investment Facilitation Council (SIFC), in its 9th meeting held on February 2, 2024, had endorsed key policy objectives for reforming the insurance sector, including: (i) increasing competition; (ii) facilitating entry of international insurance companies; (iii) strengthening regulatory enforcement; (iv) corporatisation or divestment of public-sector insurance companies; and (v) aligning the industry with global best practices. The Commerce Division further apprised the committee that the Asian Development Bank (ADB), under its proposed policy-based lending programme, had identified amendments to the Insurance Ordinance, 2000, as a critical reform action, underscoring the importance of legislative updates for strengthening Pakistan’s financial sector and improving the investment climate. The Ministry of Commerce stated that comprehensive consultations were held with key stakeholders, including the Securities and Exchange Commission of Pakistan (SECP), the Ministry of Finance, the Insurance Association of Pakistan, and relevant state-owned enterprises. A broad consensus had emerged on the need to update the Ordinance and on the contours of the proposed amendments. It was also conveyed that stakeholder feedback and developments in domestic and international insurance markets highlighted the need for a modern legal framework. Accordingly, the proposed amendments aimed to: (i) introduce contemporary insurance concepts and regulatory mechanisms; (ii) align the regime with international standards and best practices; (iii) simplify primary legislation by shifting procedural and operational provisions to subsidiary regulations; (iv) enhance competition and market openness, including facilitation for foreign insurers; (v) improve consumer protection, market conduct, and governance standards; and (vi) strengthen supervision, enforcement, and adjudication mechanisms. The Commerce Division informed the CCLC that, based on stakeholder inputs, a draft was prepared and, on the advice of the Ministry of Law and Justice, submitted for in-principle approval of the Federal Cabinet under Rule 27(1), read with Rule 16(1)(a), of the Rules of Business, 1973. Subsequently, the Federal Cabinet granted in-principle approval to proceed with the proposed amendments. The Ministry of Law and Justice vetted the Draft Insurance (Amendment) Bill, 2025, and advised the Commerce Division to proceed with the legislative process. Under Rule 16(1)(a) of the Rules of Business, 1973, the proposal was required to be submitted to the Federal Cabinet and examined by the CCLC. Accordingly, the vetted Draft Insurance (Amendment) Bill, 2025, along with a comparative statement, was submitted to the committee for consideration. During deliberations, the CCLC acknowledged that the Commerce Division had adequately justified the need for extensive amendments to align the insurance regime with international best practices. However, the committee observed that introducing approximately 220 amendments to an existing law carried a high risk of drafting errors at various stages of the legislative process. The CCLC therefore concluded that, instead of making numerous amendments to the existing law, a new draft bill should be prepared to achieve the proposed objectives. The new legislation would repeal the Insurance Ordinance, 2000, upon enactment, noting that the existing ordinance was promulgated during the martial law period. It was further emphasized that the contours of the new bill should remain within the consensus achieved through stakeholder consultations. Consequently, the CCLC did not approve the summary dated December 19, 2025, submitted by the Ministry of Commerce, and directed that a fresh draft bill be prepared in consultation with the Law and Justice Division. The committee further instructed that the new draft, duly vetted, be submitted for consideration at a subsequent CCLC meeting. Copyright Business Recorder, 2026