IDRA to crack down on excessive commissioning
The Insurance Development and Regulatory Authority is set to crack down on excessive commissioning by insurance companies to get business as it creates an unhealthy competition in the industry.
As per rules, general insurance companies are allowed to spend 15 percent of their premium income to hook business but many are offering as much as 60 percent, said Nasir A Choudhury, advisor of Green Delta Insurance. The excessive commissioning is acting as a deterrent for the sector's development.
"We will soon serve a notice to the insurance companies as the last reminder," said Gokul Chand Das, member of IDRA.
After that if the companies do not comply with the commission rule regulatory action will be taken against them, he said.
The comments came at a roundtable organised yesterday by the Bangladesh Insurance Association in collaboration with the news portal insurancenewsbd.com.
General insurance companies are supposed to provide risk coverage to the parties but higher commission against the policies put them at risk, Das said.
"IDRA will find a way by 2018 to stop the unhealthy commissioning business," he added.
The commission system is deteriorating day by day, eroding the growth of the sector, Choudhury said.
Subsequently, he called for a temporary ban on the commissioning system to ease off corruption in the sector.
The higher commissioning expense is also crippling the general insurance companies, making them unable to pay even the customers' claims, said Nizam Uddin Ahmed, founder chairman of Karnaphuli Insurance.
"The insurance sector is suffering for lack of efficient manpower," he said, while urging the IDRA to approve only professionals as managing director of the companies.
Das Deb Proshad, advisor of Meghna Life Insurance, echoed the same.
"The growth of insurance business in Bangladesh has been stagnant for the last 10 years only due to the lack of efficient manpower in the sector," he added.
There are many issues that have remained unclear in the insurance policy, like how Islamic insurance will conduct business and how the capital of insurance companies will be invested, said PK ROY, chief executive officer of Rupali Insurance.
He urged the regulator to address the loopholes of the policy.
The government has taken a Tk 632 crore project for much-needed upgrade of the insurance regulator with the view to developing Bangladesh's insurance sector.
The main goal of the project is to equip the IDRA to build and put into practice a professional and modern regulatory and supervisory system.
"IDRA is not strong enough to regulate the sector due to the lack of manpower," said its Chairman Shafiqur Rahman Patwari.
The regulator put in more effort in removing the image crisis of the insurance sector and building trust among clients about insurance coverage, he said.
Sheikh Kabir Hossain, president of BIA, moderated the roundtable.