Panel to review insurance laws

Insurers yesterday formed a committee to review pros and cons of the laws, two years after their enactment.
“The committee will review the laws and turn in a report in three weeks mentioning the anti-insurance issues there,” said Sheikh Kabir Hossain, president of Bangladesh Insurance Association (BIA), at a press meet at its office in Dhaka.
“When we get the findings, we will ask the government to raise the issues in parliament to bring changes to the laws,” said Hossain.
The parliament on March 03, 2010 passed two insurance laws to strengthen the regulatory framework and make the industry operationally vibrant.
The new laws that came into effect on March 18, 2010 are: Insurance Act 2010 and Insurance Development and Regulatory Authority (IDRA) 2010.
Insurers were closely involved from concept to drafting and preparation of laws. But the insurance companies found a lot of anti-business elements into the laws since IDRA started executing its authority in line with the new laws.
This seems to be normal in case of new laws, the BIA president said in reply about the length of time they took to review the laws.
The BIA also raised directorship issue, commission, banks' demand to make insurance companies enlisted with them, investments in stockmarket and treasury bonds and on state-owned insurance companies.
In line with the new laws, the IDRA issued a number of circulars that included barring an insurance director from becoming a director in other finance companies, imposing penalties for irregularities and increasing fire and marine tariff rates.
The other IDRA decisions that irked businesses include prohibition of directors and dependents' business with their respective insurance companies and providing details of all policies/cover notes and endorsements issued to their directors and their dependants.
“Non-life insurers will not pay any commission unless the IDRA sets a rate and a policy for agents' appointment,” said Hossain in his written statement.
The BIA president also asked the authority to allow them to invest huge amount of life fund (Tk 17, 314 crore) into the speculative capital markets.
Hossain said commercial banks are not following the central bank's order of allowing micro-insurance subscribers to open bank account at only Tk 10, which he said is depriving poor people from getting claims.
Insurance companies also demanded to allow them to open merchant banks and asset management companies like banks.
There are 62 insurance companies operating in the country. Of which, 44 are general and 18 are life insurance companies. The last insurance law had been in place since 1938. The new ones came into effect in 2010.
Total income from premium for life and non-life companies was Tk 8,313 crore at the end of 2011, up by 19.47 percent than 2010.