Reform laws for insurers soon
The government is set to pass two insurance-related bills in the next parliament session, said the chairman of the parliamentary standing committee on finance ministry yesterday.
The government also considers appointing an ombudsman to settle disputes between the insurance companies and their clients, said AHM Mostafa Kamal.
“We need to reform Insurance Act, 1938 to make it more time-befitting, which will help strengthen the capital base of the market,” he said.
So the government is going to enact Insurance Ordinance 2008 and Insurance Regulatory Authority Ordinance 2008 in the upcoming session, he added.
Kamal was speaking at a discussion between the parliamentary standing committee and Bangladesh Insurance Association organised by the association in Dhaka.
“We are trying to make the laws supportive for the insurance industry, and the laws will help reduce hassles in operations of different companies,” he said.
The new laws will allow foreign investment in the insurance industry to increase the capital base of the market, said Kamal, adding: “We have foreign investments in our stock markets, so I don't see any problem allowing them to invest in insurance sector.”
“At the same time, we are aware of protecting the interests of the local companies,” he added.
About the role of the ombudsman, he said the ombudsman will mainly look into risk coverage of insurance companies, and their terms and conditions. The official will also monitor performances of all the companies and help ensure transparency and accountability, he said.
Customers often blame the companies for not providing proper risk coverage as promised.
Kamal said the new laws will also allow companies to operate Islamic insurance without new registration and licence. “Presently the country's banks are operating Islamic banking without any new registration and licence. So the insurance sector should get the same benefit.”
He also stressed the role of insurance association in creating awareness among the clients.
The laws will make it mandatory for both the general and life insurance companies to increase their paid-up capital. The amount of paid-up capital of a non-life insurance company should be raised to Tk 40 crore from Tk 15 crore, and Tk 30 crore for life insurance companies from Tk 7.5 crore.
A mandatory solvency margin for the companies will also be incorporated in the new laws.
AKM Rafiqul Islam, chairman of the insurance association, presented a set of recommendations to the parliamentary standing committee, demanding a 10-year time for increasing the paid-up capital.
He also urged the government to reduce the amount of deposit money, which the companies now have to deposit as 'approved security' to the Bangladesh Bank.
Tazul Islam and MA Mannan, members of the parliamentary standing committee, among others, were present at the discussion.