B Mirror Report: At least 18 non-life insurance companies have been accused of illegally offering “No Claim Bonus” (NCB) facilities in motor insurance policies in violation of tariff rules and insurance regulations. In some cases, discounts reportedly reached as high as 50 percent.

Under existing regulations, NCB benefits are only applicable during policy renewal if no claim was made in the previous year. However, a review of insurance documents, premium receipts, and related records found that several leading insurers, including Union Insurance, Bangladesh National Insurance, and Global Insurance, offered such discounts on newly issued policies, violating insurance rules.

Industry insiders warn that the practice is causing significant revenue losses for the government while creating unhealthy competition in the insurance sector.

Documents reviewed revealed at least six motor insurance policies issued by Union Insurance where unlawful NCB benefits were provided. A vehicle insured for Tk 4.5 million owned by Md Jewel Rana of Demra received a 30 percent discount. Similar benefits of up to 40 percent were given on policies exceeding Tk 3.5 million belonging to Habiba Khatun and Farida Yasmin.

Several policies issued from the company’s Gulshan and Dilkusha branches reportedly offered discounts ranging from 30 to 50 percent, including multiple cases with a record 50 percent NCB.

Md Ismail Shah, Assistant Manager (Accounts and Underwriting) at the Gulshan branch, acknowledged that the policy in question involved a microbus insured for Tk 4 million. He said the customer received a 30 percent bonus considering the vehicle was a 2020 model and added that similar practices exist in other insurance companies.

However, he admitted that providing no claim bonus during the first year was not compliant with regulations.

At least five motor insurance policies issued by Bangladesh National Insurance were found to include unlawful NCB benefits ranging from 30 to 50 percent. The policies were issued from several branches, including Shantinagar, Gulshan, Motijheel, and the head office.

Md Rashedur Rahman, Assistant Vice President of the company’s Paltan branch, said customers with previous insurance histories are often given NCB benefits for subsequent vehicles. However, he also admitted that offering the benefit from the first year is not legally permitted.

Global Insurance was also found to have issued at least five policies with irregular NCB facilities, most of them from its Kamalapur branch. Discounts of up to 40 and 50 percent were reportedly offered.

Kamrun Nahar (Bina), Executive Vice President and branch in-charge of Kamalapur branch, admitted there is no rule allowing NCB from the first year. When asked why such benefits were still provided, she declined detailed comment.

Asia Pacific General Insurance allegedly provided illegal bonuses ranging from 30 to 50 percent on at least four motor insurance policies. Prime Insurance issued three such policies, while Rupali Insurance provided up to 50 percent NCB on two policies.

South Asia Insurance and Crystal Insurance also reportedly offered up to 50 percent discounts on two policies each.

Additionally, at least 10 other insurers were found to have provided such unlawful facilities in one or more cases, including Green Delta Insurance, Federal Insurance, Progoti Insurance, Reliance Insurance, Islami Insurance, Nitol Insurance, United Insurance, Phoenix Insurance, Sonar Bangla Insurance, and Republic Insurance.

According to insurance regulations, NCB can only be offered during renewal if no claim was made in the previous policy year. There is no legal provision allowing such discounts for newly issued insurance policies.

Legal experts say fake or unlawful NCB offerings constitute a clear violation of Section 49 of the Insurance Act 2010, which prohibits unauthorized rebates or commissions.

The law allows for strict penalties, including fines of up to Tk 500,000, additional daily fines for continued violations, suspension or cancellation of licenses, removal of responsible officials, and even criminal proceedings in serious cases.

Industry experts believe weak regulatory oversight has allowed such irregularities to spread, putting compliant insurers at a disadvantage and increasing risks across the sector.

Saifunnahar Sumi, spokesperson for the Insurance Development and Regulatory Authority (IDRA), said first-year NCB facilities are not allowed under insurance law. She added that regular inspections have become difficult due to manpower shortages, but action will be taken if irregularities are detected during audits.