Ban on use of multiple accounts for collecting ins premium
The insurance regulator has issued a notice recently imposing a restriction on use of multiple bank accounts by non-life insurance companies for premium collection.
Only one bank account can be used and the same must be used to pay taxes to the government, a limit put in place to stop unhealthy commission business, said Gokul Chand Das, a member of the Insurance Development and Regulatory Authority (IDRA).
He said insurers were allowed to spend the highest 15 percent against their commission income but most were found going past the limit using multiple bank accounts for premium collection.
The move will also help the authority to easily monitor income and expenditure of insurance companies, he added.
The insurance companies were asked to close the multiple bank accounts by May 13 and send updates. Later, the time was extended till June 30 in response to a request from Bangladesh Insurance Association (BIA).
The IDRA also asked the non-life insurance companies not to pay claims in cash. The insurance industry’s premium growth is slow due to anomalies in financial transactions, said a top executive of a private insurance company.
He said insurance companies were concealing the real premium income to avoid paying tax.
The new move of using one account will improve insurance penetration, he added.
Currently, 46 non-life insurance companies are in operation while the penetration has been on the decline for nine years since 2009, according to the IDRA.
The penetration of non-life insurance companies declined to 0.15 percent in 2017 from 0.20 percent in 2009. Non-life insurance companies saw a 13.45 year-on-year growth in premium collection in 2018.
The total premium of non-life insurance companies stood at Tk 3,382 core at the end of 2018, the IDRA data shows. Unhealthy competition centring commission business weakened the claim settlement capacity of non-life insurance companies to 32.60 percent last year, a 10-year low.
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