Reform needs for insurance companies in Bangladesh
July 11th, 2007
Insurance companies have the legal and moral obligation to settle genuine claims as soon as possible, said the finance adviser, AB Mirza Azizul Islam, on Tuesday.
‘Why do you need external pressure [to settle claims],’ he asked a workshop on contribution of insurance to Bangladesh economy at a city hotel.
He was referring to certain claims that had remained pending for two to three years until 80 per cent of them to the tune of Tk 100 crore were settled on intervention of the chief controller of insurance four months ago.
Mirza Aziz urged the Bangladesh Insurance Association to set a standard of corporate responsibility and the association members to comply with it.
He also remarked that ‘soul-searching is needed to bring corporate good governance in the sector’.
The adviser said merger of insurance companies was one way to bring down the cost of operations as the local market was not big enough for as many as 62 companies to operate in.
He said he had taken an initiative to bring the insurance sector under the finance ministry from the commerce ministry and it would happen very soon.
He hinted at a change soon in the top management of Sadharan Bima Corporation as the state-owned insurance company had been facing some problems.
The chief controller of insurance, Mahfuzul Haque, said the insurance companies should go for credit rating for their own interests. ‘It is very important.’
Anomalies were detected at a number of insurance companies during a recent physical inspection of all the 62 companies operating in the country, he told the workshop.
‘My office provided each of the companies with its evaluation report and advised it to comply with the recommendations made in it,’ the CCI said.
Nizamuddin Ahmed, vice-president of Bangladesh Insurance Association, said more than 270 insurance claims worth about Tk 165 crore had been pending for years with the Sadharan Bima Corporation. He requested the finance adviser to look into the matter.
A BIA executive committee member, Abdul Matlub Ahmad, presented the keynote at the workshop.
The insurance sector earned over Tk 2,500 crore in gross premium and contributed Tk 111 crore to the exchequer in 2005, revealed the paper.
About 8 lakh people are employed in the sector directly or indirectly, Matlub said. He urged the finance adviser to amend the insurance laws through an ordinance and bring the sector under the umbrella of finance ministry as soon as possible. In his presentation, Matlub said the corporate tax should be lowered to 15 per cent from the existing 45 per cent. He hoped that in the next five years the insurance sector would be able to generate a premium income of Tk 10,000 crore and make an investment of about Tk 12,000 crore and contribution around Tk 500 crore to the exchequer in value-added and other taxes.