United Insurance Secures Legal Victory as IHC Suspends SECP Order

United Insurance IHC Halts SECP Guarantee Business Suspension

On July 3, 2025, the Islamabad High Court (IHC) granted interim relief to United Insurance Company (UIC) by suspending the SECP’s May 20 directive that halted UIC’s guarantee business  this decision has not only shielded UIC’s operations but also underscored its dedication to compliance, transparency, and stakeholder trust.

v Understanding the Context

·        Regulatory Action
In May 2025, the Securities and Exchange Commission of Pakistan (SECP) invoked Section 60 of the Insurance Ordinance, 2000, suspending UIC’s ability to issue or renew financial guarantees. The move followed claims of substantial delays in encashment—Rs 2.2 billion by December 2023—and an additional Rs 822 million in 2024–25 complaint backlog 

·        Legal Journey
UIC initially secured a stay from the Lahore High Court in February 2024. After the LHC’s petition was dismissed in April 2025, UIC then approached the IHC through a writ petition, asserting that SECP’s order was based on unverified allegations, lacked procedural fairness, and infringed upon due process rights 

v IHC’s Interim Protection: A Rational & Fair Decision

By suspending SECP’s directive, the IHC achieved a balanced outcome:

1.     Upholding Due Process
The court emphasized that regulatory authorities must operate within legal guardrails. Interim relief ensures UIC can continue operations while awaiting a full review 

2.     Preserving Market Confidence
Allowing UIC to issue guarantees safeguards ongoing business deals and protects the interests of contractors, developers, and corporate clients.

3.     Mandating Transparency
The IHC directed SECP to submit detailed comments within two weeks, signaling that any final action must respect legal clarity and fairness .

v Why This Is a Victory for UIC

1. Reaffirmed Reputation

Despite facing regulatory scrutiny, the IHC’s decision shows trust in UIC’s integrity and capacity to address concerns methodically.

2. Commercial Continuity

UIC can now maintain its guarantee operations—essential for sectors like construction, public procurement, and trade—ensuring client commitments remain unaffected.

3. Compliance Driven Collaboration

UIC’s approach—engaging judicially yet cooperating fully—demonstrates a constructive relationship with regulators, boosting long-term credibility.

v UIC’s Path Forward: Growth Through Governance

To capitalize on this momentum, UIC is focusing on:

·        Clearing Legacy Guarantees: Honouring pending obligations and securing proper collateral.

·        Strengthening Oversight: Enhancing internal audit, risk management, and compliance systems.

·        Engaging with Stakeholders: Keeping SECP, clients, and partners informed about progress and reforms.

·        Highlighting Progress: Sharing audit updates, policy changes, and milestones to reinforce public and investor trust.

v Impact on Stakeholders

Clients & Partners

Contractors, developers, and institutions can now rely on UIC’s guarantees—critical for many business operations.

Investors & Analysts

The IHC ruling mitigates immediate regulatory risk and illustrates UIC's proactive governance, improving its investment profile.

Industry Observers

UIC's case sets a precedent for fair regulatory practice, highlighting the importance of compliance and judicial accountability in Pakistan’s insurance sector.

v Frequently Asked Questions (FAQ)

Does the IHC decision remove SECP’s concerns?

No—it temporarily suspends the directive pending full judicial review. UIC must still comply with SECP’s demands regarding guarantees and transparency.

Are guarantee holders now safe?
Yes. UIC can continue issuing and renewing guarantees, offering reassurance to clients and market participants.

What’s next for UIC?
UIC will address historical compliance issues, engage with regulators, settle pending guarantees, and reinforce internal governance frameworks.

Conclusion

The IHC’s suspension of the SECP order is more than just procedural relief; it is a testament to UIC’s resilience, commitment to governance, and confidence from the judiciary. As UIC navigates compliance and policy renewal, it stands poised to not only restore but strengthen market trust—emerging as a model for integrity and proactive regulation in Pakistan’s insurance industry.