JBC seeks to grab big chunk of life ins biz

Jiban Bima Corporation (JBC) wants to grab a big chunk of the country's life-insurance business with legal blessings, officials said.

To this effect, the corporation has recently requested the Financial Institutions Division (FID) under the Ministry of Finance to amend two sections of the Insurance Corporations Act 2019 to pave the way.

Under the proposed amendment, the state-run insurer wants cent per cent of group insurance of employees of state-owned entities and 50 per cent reinsurance of private life insurers to be done with the JBC.

The corporation wants to make these provisions mandatory by amending the sections-16 and 17 of the law.

FID officials say they are reviewing the rationale of the proposal placed by the corporation.

Both the corporations have been established under the section- 06 of the Insurance Companies Act-1973.

Sources said the JBC in this case has referred the section 16 of the Insurance Corporations Act, 2019 which allowed the Sadharan Bima Corporation (SBC) to underwrite 100 percent risks of non-life insurance business.

It also mentioned that the section 16 of the act, however, did not give any directives about the procurement of insurance coverage from the JBC in case of employees of the state-owned entities.

Though the JBC and SBC have been established under the same law, the JBC is facing uneven competition under the section-16 of the Insurance Corporations Act, 2019.

Sheikh Khayeruzzaman, deputy general manager of SBC, said that the corporation has sent a letter to the ministry seeking the amendment aiming to enhance the business.

"But we are yet to receive any response from the ministry," he said.

Mr Khayeruzzaman said many state-owned enterprises have bought insurance coverage from the JBC. Since this was not made mandatory under the law, many state-owned entities do not follow the same, he said.

"Since the SBC is enjoying the facility of mandatorily buying insurance coverage by the state entities from it, we also can demand the same types of facility in case of group insurance for government employees," he said.

Nazma Mobarek, Secretary, FID, acknowledged receiving such a proposal from the JBC.

She said an additional secretary has been given the task to verify the rationale of the demand made by the JBC.

"We will take steps after holding meetings with the relevant stakeholders," said Ms Mobarek.

There are some 36 life insurance companies in the country including the sate-owned JBC. At the end of the fiscal year 2023-24, some 16.49 million people were under the insurance coverage.

The life insurance sector received some Tk122.73 billion as premium in 2023 while the number of policy was 7.37 million.

Adeeba Rahman, first vice president, Bangladesh Insurance Association, said that an uneven competition will be crated in the market if the plea of the JBC is granted.

Because, she said, the JBC has little experience in group insurance coverage thus the rating would not be competitive and JBC's claim settlement record is also not good.

Ms Rahman said already non-life insurance companies facing difficulties in getting re-insurance claims from the SBC, as the corporation fails to send fund abroad due to dollar crisis.

"The private life insurance companies also may experience same problems if they buy reinsurance coverage from the JBC," she said.