Insurers won't pay RMG units of Rana Plaza

Five apparel factories that were operating in the ill-fated Rana Plaza in Savar will not be able to file insurance claims as the garment units were housed in a faultily-constructed building, insurers said.
Of the five, New Wave Bottoms and New Wave Style have fire and marine insurance with Green Delta Insurance Company Ltd.
Building collapse is not covered by the factories' insurance policy and so these two factories will not get the Tk 14-15 crore claims as per the policies with Green Delta, officials said.
“Even, if incidence of building collapse was included in the policy, the factories would not get the money because of the wrong foundation of the building,” said Nasir A Choudhury, managing director of Green Delta.
The nine-storey building, which collapsed on Wednesday with more than 3,000 workers trapped in the five factories, was built on a marshy land and had a foundation for six storeys only. Death toll already crossed 365.
Sabbir Ahmed, chief financial officer of Reliance Insurance, also echoed Choudhury about the claims. Though the owners take out fire and marine insurance to cover their export-import business, they do not insure their workers.
Bangladesh Garment Manufacturers and Exporters Association, the trade body of garment makers and exporters, has a group insurance for its member factories, but it is limited to only 20 workers from each factory.
Under the policy, a worker gets Tk 1 lakh as compensation in case of any accident.
“Insurance coverage is very specific. The factories will not be able to file claims for the building collapse against their fire insurance coverage,” said Rafiqul Islam, an insurance veteran who has served the industry for more than five decades.
“Insurance coverage is very specific. The factories will not be able to file claims for the building collapse against their fire insurance coverage,” said Rafiqul Islam, an insurance veteran who has served the industry for more than five decades.
If the factories had considered 10 more hazards, including building collapse, in their insurance policy, then the question of claims would have come, Islam said.
“These factories will not be paid claims as these were housed in a faulty building,” he said.
However, Humayun Kabir, manager of Green Delta's Nawabpur branch where New Wave has insurance for its two factories, said it cannot be concluded now that these companies would not qualify for claims.
“It depends on the government's final report on the building,” Kabir said.