Regulator calls aspiring insurers to hearing on business plans

The insurance regulator on Tuesday summoned the 77 aspiring insurance companies to a hearing between June 16-20 to quiz about their business plans and financial strength.
The move comes after the Insurance Development and Regulatory Authority (IDRA) found a host of inconsistencies during preliminary inspections into the applications received between April and May for new companies, a senior official of IDRA said, preferring to remain unnamed.
“We noticed that some applicants have problems in their paid-up capital and security deposits with Bangladesh Bank, while some did not even meet the eligibility criteria but sent in their applications.”
Only two representatives from each aspirant company will be allowed to attend the hearing.
The government in February sought applications for new insurance companies, in a bid to enhance the sector. The intention was to award licences to ruling party higher-ups and businesses with strong political links, ahead of the end of its tenure.
Of the 77 applicants, only 10-12 would be given the licence to set up life insurance companies, according to a finance ministry official.
There are 62 insurance companies at present, of which 43 are general insurers, 18 life insurers and 1 non-life insurer.
Total premium earned by the life insurers was nearly Tk 6,000 crore in 2011, up 20 percent from a year ago.
Earlier, the Awami League-led government issued 11 licences for new insurance companies in 1996-2001, with three given on the last day of the government under controversial circumstances in 2001.