BM Desk : To strengthen government supervision over insurance businesses, significant changes are being made to the Insurance Act of 2010. These amendments’ primary goals are to reorganize insurance company boards of directors, lessen the influence of families, and impose severe fines to stop irregularities. The initiative’s goals are to update this 15-year-old law and fortify the Insurance Development and Regulatory Authority (IDRA), which is the regulatory agency.
IDRA sources claim that the law’s revision will give the regulatory body more jurisdiction over the insurance industry, something that the current legislation does not permit. According to a senior IDRA official, numerous insurance businesses are charged with noncompliance with regulations and failure to pay clients’ dues. Strict action must be taken to get rid of these anomalies and bring order back to the insurance industry. In order to solicit feedback from the general public and insurance industry participants, the draft law will shortly be posted on the IDRA website.
The insurance claim settlement rate was a mere 57% in 2024. In other words, clients have only collected Tk 9,476 crore out of a total claim of Tk 16,484 crore. In March of this year, IDRA required six insurance companies to submit specific action plans to settle their claims because of the dire circumstances facing some of them.
There are 82 insurance firms in the nation at the moment, comprising 46 general insurance companies and 36 life insurance companies. The last 14 years have seen the cancellation of over 2.6 million insurance policies, illustrating the inadequate administration of the insurance industry.
According to the new law, the regulatory body has the authority to reassemble an insurance company’s board of directors if it violates the interests of its clients. The board may even be dissolved, but a new one must be established within two years.
No family, organization, or individual may directly or indirectly own more than 10% of an insurance company’s shares. This is an attempt to lessen the influence of family.
It has been suggested that life insurance agents’ commission on the first year’s premium be lowered from 35% to 25%. But the commission can go up from 10 percent to 15 percent for the second year. The commission will be 5% in the following years.
The regulatory agency will have the authority to enter the insurance company’s offices, search them, confiscate any relevant documents, and request police help. In order to settle customer claims, the regulatory body is also being granted the authority to sell the company’s assets.
A company may be prohibited from offering new policies or collecting premiums if it is unable to cover the capital deficit within the allotted time. A fine of up to 10 lakh to 1 crore taka and a penalty of up to 50,000 taka per day may be imposed in this situation.
Directors, stockholders, or members of their families are not allowed to borrow money by mortgaging the insurance company’s assets. Additionally, ten years of management, business, or professional experience are required to become a director or chairman of an insurance company. Six years has been established as the maximum continuous term for a director.
The new rule raises the minimum penalties for irregularities from 5 lakh taka to a maximum of two years in prison or both. Bangladesh Bank does not have the same authority over the insurance industry as it does over the banking industry, according to IDRA sources. Without expanding the authority, the current insurance industry crisis cannot be resolved.
