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 Insurance laws on back burner Top official says chairman to be appointed soon

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Join date : 2010-05-30

PostSubject: Insurance laws on back burner Top official says chairman to be appointed soon   Tue Jun 29, 2010 5:27 pm

Sajjadur Rahman

The insurance industry, growing by 15 percent for the past couple of years, sees no headway in implementation of the laws that will regulate the sector.

However, Shafiqur Rahman Patwari, secretary of the banking division of the finance ministry, said they could not implement the laws, particularly formation of the insurance authorities, as the government was busy with the national budget.

The government passed the new laws in March this year to replace the 72-year-old ones, but these are yet to see light.

“Nobody bothers about the insurance industry. It has been neglected for years,” said Nasir A Chowdhury, managing director of Green Delta Insurance.

The government passed two laws -- Insurance Regulatory Authority (IRA) Act 2010 and Insurance Act (IA) 2010 -- in March.

With the IRA Act 2010 in place, the Department of Insurance will no longer exist and the sector will get rid of the Insurance Act 1938 once the IA 2010 comes into effect.

After implementing the IRA Act 2010, the authorities will formulate rules and regulations to govern the industry.

“We'll appoint a chairman for the authorities soon and the chairman will recruit four members,” said Shafiqur Rahman Patwari.

He said: “They will formulate the rules and regulations.”

Patwari also said the chairman will be at least a secretary-status person and the members will be of additional secretary level.

However industry people said preparation of the regulations would take nearly one year.

“It will take around a year,” said Nasir A Chowdhury.

The insiders said the industry is facing problems to raise paid-up capital, as the new laws are not being implemented.

Other issues -- introducing a mandatory solvency margin, separating general insurance from life and Islamic insurance, limiting commission expenses and reducing the number of directors in the respective boards -- are also hanging on.

Foreign investment in general insurance companies, allowed by the new law, is also making no progress.

There are 62 insurance companies in operation under the private sector in Bangladesh, of which 17 are life insurance companies and 43 are general. The government owns two companies -- Sadharan Bima Corporation and Jiban Bima Corporation.

The industry generated premium income worth nearly Tk 1,500 crore in 2009.

The approved laws proposed an increase in paid-up capital for both general and life insurance companies. The amount of paid-up capital for a general insurance company has been raised to Tk 40 crore from Tk 15 crore, and for a life insurance company, it was raised to Tk 30 crore from Tk 7.5 crore.

“The government is looking for competent people for the posts of chairman and members for the authorities,” said AKM Rafiqul Islam, chairman of Bangladesh Insurance Association and managing director of Pragati Insurance.
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