Most of the insurance companies saw a hike in their profits in the six months to June, thanks to a rise in premium income and dividend from investment.
A total of 33 companies disclosed their half-yearly profits as of yesterday. Of them, 23 saw a rise and 10 a fall.
Reliance Insurance's profit rose 10 percent to Tk 13.97 crore in the January-June period from the same time a year ago.
“Our income from policy premium went up 10 percent to Tk 90 crore this year due to an increase in new policies,” said Akhtar Ahmed, an adviser to the insurer.
The interest income from investment such as fixed deposit also raised profits, Ahmed said.
Profits would have been higher, had there been no political crisis in the country, he said.
“But, we are facing difficulties in doing business due to unethical practices in paying commission to sales agents,” Ahmed said.
Some insurers are paying higher commission -- up to 60 percent -- to rope in clients, according to insurers.
The agency commission is a fee paid to an agent or an insurance salesperson as a percentage of the policy premium.
The regulator, Insurance Development and Regulatory Authority, has set the ceiling of commission at 15 percent in March 2012 to ensure strict compliance and ethical business practices.
The unethical practices in paying commission encourage corruption and generate black money, Ahmed said, adding: “The government gets poor tax for this.”
This should be stopped for the interest of the insurance industry, he said.
Central Insurance's profits soared 33.6 percent to Tk 6.53 crore in the first half of the year compared with the same period last year, thanks to an increase in insurance policy, said Zahid Anwar Khan, managing director of the company.
“We settle insurance claims in time and so clients are gaining confidence,” Khan said. “Our income from fixed deposit also increased our profits."
The insurance business will get a boost if the economy sees vibrancy, he added.
The pace of opening letters of credit is slow and commercial banks are sitting on idle money in absence of investment, Khan said.
Insurers will lose business if the political situation gets worse, he added. Central Insurance's EPS stood at Tk 1.57 during the first half this year.
Phoenix Insurance profit rose 22.2 percent year-on-year to Tk 8.67 crore during the period due to dividend income from stockmarket investment, said Rafiqur Rahman, company secretary of the insurer.
The company's premium income rose 13 percent to Tk 35 crore during the period.
Rahman also called for reining in the unethical practices in giving commission to sales agents.
Green Delta Insurance saw Tk 7 crore in net profit in the six months, which is 58.8 percent lower than that in the same period last year.
The company's costs for claim settlement rose during the period, said Nasir A Choudhury, an adviser to Green Delta. “We also saw a rise in premium income.”
Sheikh Kabir Hossain, chairman of Bangladesh Insurance Association, said the government should give proper policy support to develop the sector.
The government should also ask industrialists to go for individual insurance for each worker instead of a group insurance, Hossain said.