Regulator to issue new insurance licences

The Insurance Development and Regulatory Authority (IDRA) plans to issue up to 12 new licences for life insurance this month, officials said.
IDRA received 77 applications, with 74 of which for life and three for general insurance.
“The government plans to issue 10-12 licences and all of them may be for life insurance,” said a senior official of the finance ministry.
Many applicants are ruling party high-ups or businessmen with strong political connections. Life insurance Corporation of India has tied up with a local general insurer to set up a joint venture life company here.
“We will reveal our decision on the licences to the applicants in 40 days, as per laws,” said M Shefaque Ahmed, chairman of IDRA.
IDRA stopped receiving applications for new companies on May 15 after extending the deadline three times since it published an advertisement on February 20. Currently, 18 life insurers, including state-owned Jibon Bima Corporation, operate in Bangladesh.
The Awami League-led government issued 11 licences for new insurers in its previous regime (1996-2001), with three given on the last day of the government in power.
The issue is being debated as analysts and industry insiders think the move would crowd the already saturated sector and make it harder for the newly established IDRA to regulate the sector. A lack of skilled manpower is also a concern.
However, they said there is potential for new life insurance companies, not general ones.
"It'll be tough to allow more companies without developing qualified manpower. The industry has to have skilled professionals to deal with the increasing risk," said Nasir A Chowdhury, chief adviser of Green Delta Insurance.
Chowdhury, who recently retired from the post of managing director of Green Delta after serving for nearly three decades, said the authority should check the technical know-how of the sponsors of the new companies before issuing licences.
Understanding re-insurance is another major issue for the industry; otherwise, payments against claims get delayed and unethical practices increase, he added.
Existing life insurers believe there are scopes and prospects for new life insurance companies in the market, but the benefits will not come immediately.
“Life insurance is an ever-increasing market and there are business opportunities for new entrants,” said Jamal Mohammed Abu Naser, managing director of National Life, a leading life insurer in the country.
Naser said there were 37 life insurance companies in Bangladesh in 1971 and presently, there are only 18 even though the economy has grown manifold.
“A lack of efficient manpower is a big challenge. There is hardly any scope for skills development in Bangladesh,” he said. Developing life products is critical and needs highly qualified people, he added.
Industry insiders said India too is finding it difficult to get efficient employees to run the sector.
There are 62 insurance companies operating in the country; 43 are general insurers, 17 are life insurers while the remaining two are government owned -- one life and another non-life. Total premium earned by the life insurers was nearly Tk 6,000 crore in 2011, up by 20 percent from a year ago.

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