August 10, 2022, 5:03 am

FT online

2019-03-21 10:58:13 BdST

Life insurers to come under special audit

The insurance regulator has appointed external auditors for most life insurers to verify the latter's 'high' management expenses.

Insurers incur higher expenses when they procure business and such type of expenditure weakens the financial health of the companies.

The Insurance Development and Regulatory Authority (IDRA) has appointed 27 auditing firms to carry out special audit of the accounts of 27 life insurers, out of the total number of 32, as per the Insurance Act of 2010.

"This is a sort of inspection [of the insurers], as we often fail to conduct on-site inspection for shortage of manpower," said Gokul Chand Das, a member of the IDRA.

The regulator will take action as per the law if insurers are found having spent in excess of the 'maximum allowable limit', he told the FE.

The IDRA observed that most life insurance companies are spending in excess of the maximum allowable limit of management expenses as per the provision of Section 62 of the Insurance Act, 2010 and relevant rules for business operations, according to a note the IDRA sent to the auditing firms.

"Consequently, policyholders and shareholders are losing their expected investment return," it added.

The auditors will examine management expenses for the years 2015, 2016 and 2017, and submit reports within 90 days of their appointment date.

Most of the appointments came into effect on February 12 last while some others on January 30 last.

The insurers that will come under special audit include Alfa Life Insurance Company, Chartered Life Insurance Company, Diamond Life Insurance Company, Delta Life Insurance Company, Fareast Islami Life Insurance Company, Guardian Life Insurance Company, Homeland Life Insurance Company, Jamuna Life Insurance Company, Jiban Bima Corporation, LIC of Bangladesh, Meghna Life Insurance Company, Mercantile Life Insurance Company, the US-based MetLife, National Life Insurance Company, NRB Global Life Insurance Company, Padma Islami Life Insurance Company, Popular Life Insurance Company, Prime Life Insurance Company, Progati Life Insurance Company, Progressive Life Insurance Company, Protective Islami Life Insurance Company, Rupali Life Insurance Company, Sandhani Life Insurance Company, Swadesh Life Insurance Company, Sunflower Life Insurance Company, Trust Life Insurance Company and Zenith Life Insurance Company.

Meanwhile, the regulator has also resumed its activities concerning the special auditing of some 24 non-life insurance companies. The IDRA halted the activities back in 2016 following a request from the Financial Institutions Division (FID).

IDRA monitors and regulates the country's insurance companies that handle huge sums of money of millions of clients.

There are allegations that the companies were spending a lot of money in the name of management costs.

Bangladesh has some 77 insurance companies -- 32 life insurers and 45 non-life insurers.

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