July 18, 2024, 2:34 pm


2018-02-28 21:15:20 BdST

All out effort needed to develop Insurance sector


Speakers in a roundtable Tuesday stressed the need for all-out efforts from stakeholders to develop the country’s neglected insurance sector.

They sought professional support from the stakeholders to brighten the image of the insurance sector addressing the loopholes of insurance policy, said a statement issued by Bangladesh Insurance Association (BIA).

The comments came at a roundtable organised by the BIA in collaboration with the news portal insurancenewsbd.com.

The Insurance Development and Regulatory Authority (IDRA) is set to crack down on excessive commissioning by insurance companies to get business as it creates an unhealthy competition in the industry.

As per rules, general insurance companies are allowed to spend 15 percent of their premium income to hook business but many are offering as much as 60 percent, said Nasir A Choudhury, advisor of Green Delta Insurance. The excessive commissioning is acting as a deterrent for the sector's development.

“We will soon serve a notice to the insurance companies as the last reminder,” said Gokul Chand Das, member of IDRA.

After that if the companies do not comply with the commission rule regulatory action will be taken against them, he said.

General insurance companies are supposed to provide risk coverage to the parties but higher commission against the policies put them at risk, Das said.

“IDRA will find a way by 2018 to stop the unhealthy commissioning business,” he added.

The commission system is deteriorating day by day, eroding the growth of the sector, Choudhury said. Subsequently, he called for a temporary ban on the commissioning system to ease off corruption in the sector.

The higher commissioning expense is also crippling the general insurance companies, making them unable to pay even the customers' claims, said Nizam Uddin Ahmed, founder chairman of Karnaphuli Insurance.

“The insurance sector is suffering for lack of efficient manpower,” he said, while urging the IDRA to approve only professionals as managing director of the companies.

Das Deb Proshad, advisor of Meghna Life Insurance, echoed the same.

“The growth of insurance business in Bangladesh remained stagnant for the last 10 years only due to the lack of efficient manpower in the sector,” he added.

There are many issues that have remained unclear in the insurance policy, like how Islamic insurance will conduct business and how the capital of insurance companies will be invested, said PK ROY, chief executive officer of Rupali Insurance.

The government has taken a Tk 6.32 billion project for much-needed upgrade of the insurance regulator with the view to developing Bangladesh's insurance sector.

The main goal of the project is to equip the IDRA to build and put into practice a professional and modern regulatory and supervisory system.

“IDRA is not strong enough to regulate the sector due to the lack of manpower,” said its Chairman Shafiqur Rahman Patwari. He said claims worth Tk 2.0 billion has been settled after his joining in the IDRA.

The regulator put in more effort in removing the image crisis of the insurance sector and building trust among clients about insurance coverage, he said.

Sheikh Kabir Hossain, president of BIA, moderated the roundtable.

Unauthorized use or reproduction of The Finance Today content for commercial purposes is strictly prohibited.

Popular Article from Economy