Special Supplement

Country’s economy to benefit from mandatory insurance coverage: Sheikh Kabir

Published : 04 Nov 2019 07:33 PM | Updated : 07 Sep 2020 07:49 PM

"Step is on to bring all the government and private establishments under mandatory insurance coverage. Both the insurance companies and owners of establishments will be benefitted from the decision,” Sheikh Kabir Hossain, president of Bangladesh Insurance Association (BIA), said in an exclusive interview with national English daily Bangladesh Post.

He said the inhabitants or owners of those infrastructures or buildings will get insurance coverage for fire accident, earthquake or any other disaster. Such insurance coverage is mandatory in the developed countries, he further said.

The president of BIA replied a set of queries by Bangladesh Post in regards to the country's emerging insurance industry. The excerpts of his interview is produced bellow.  

Bangladesh Post: Please brief us the on-going situation of the country's insurance industry?  

Sheikh Kabir: You know, an unhealthy competition was going on in the insurance sector, in terms of business, commission etc. for a long period of time. Several times we tried to stop this unhealthy practice but failed. It was a failure of all of us. Or we can say that there was lack of cooperation and coordination among us. This time we all together, under the leadership and cooperation of the IDRA, have come to a concrete decision that the insurance commission will be 15 percent including the government's VAT and Tax.  The decision has come out through joint efforts of the top executives of Insurance companies and IDRA. 

IDRA has already issued several circulars to the companies for strict implementation of the decision. I feel that this is the main thing that we had to finalise for the betterment of the industry. We are also extending all-out support from the Bangladesh Insurance Association (BIA) to materialize the decision effectively and strictly, and I feel that we on the right track so far in this connection. 

IDRA has already formed a monitoring committee to go for punitive measures in terms of violations to the rules on commission issue. It was named as 'surveillance' committee where they kept representation of BIA but we requested IDRA to avoid BIA representation in this regard so that the question of any conflict of interest may not rise.  

Bangladesh Post: Now please tell us what are the challenges in implementing such a decision?

Sheikh Kabir: Challenge is that earlier we were not able to decide about the percentage of commission. Many of the companies had determined the commission according to their own will as there was no executive order from the regulatory authority. Well, now we have been trying our best to meet all the challenges in this regard and we are moving forward successfully. Now there will be no way left to disobey the decision because it's an order from the government.  We are also adopting strict monitoring measures to ensure it. We have reached another important understanding that we will no more practice to snatch away other’s business strategically. A gentleman agreement has been signed in this regard. It will also be monitored strictly. If anyone lodge complaints in this connection, we try to settle the dispute through investigation and discussion.

Recently Finance Minister sat with us, the BIA, IDRA and other stakeholders of the industry to discuss how to develop the sector. I feel that it was a fruitful discussion. The minister urged no re-insurance to go outside the country. For many years in the past we were requesting the authority to ensure that no re-insurance go out of the country. Although it is alleged that we do not have strength for maintaining re-insurance, we don’t accept it. Our 'General Insurance Company', the government sector non-life and only re-insurance company, now doing this, and it has all the capacity to meet our demands as they have their re-insurance agreement with some international companies. 

The Finance Minister has given us some more effective directives that include bringing in all the government and private establishments and homesteads under mandatory insurance coverage. This decision will bring betterment for both the insurance companies as well as for the building owners. And above all, the economy of the country will be benefitted. Because in case of any fire, earthquake or any other incidences, the inhabitants or owners of buildings will get insurance coverage, which is mandatory in the developed countries. 

We have demanded for approval of Re-Insurance company from private ownership as it will bring competition here. Interested entrepreneurs will come forward for having license. The government may approve more than one company. We have also demanded withdrawal of the third party insurance of the motorized vehicles as it has no coverage. The minister has agreed it and has given decision in this regard. 

We are putting emphasize in setting up of effective Insurance Academy for developing skilled human resources. It has been found that our existing Insurance Academy is not working effectively which we had told the former Finance Minister and also have told the same to the incumbent Finance Minister. He has assured us of taking measure in this regard. The academy is probably is coming under supervision of IDRA, or how the government will execute it, let us see this. The strategy of Bangladesh Institute of Banking Management (BIBM) can be followed in this regard. 

Bangladesh Post: Please tell us whether the industry gets expected policy support from the government.     

Sheikh Kabir: This morning I have talked to the Secretary of the Banking and Financial Institutes Division. He has assured us that discussion will be held soon regarding implementation of all the processes underway regarding insurance sector development. The government will decide about Insurance Academy and other policy matters. Several meetings will be held with us, and if necessary, it will go up to the Cabinet. 

Bangladesh Post: There are allegations that some NGOs are providing Insurance coverage. Do you think it is legal? What is your reaction and, if it’s illegal, how to prevent them? 

Sheikh Kabir: Yes, we also have noticed that some NGOs are engaged in providing re-insurance coverage illegally. I think it should be stopped as soon as possible. We have also raised the issue to the Finance Minister and he has assured us of taking measures in this regard soon. It may be that there have something in their laws in regard to providing insurance coverage, what we have to look into. And if their laws permit them to go for insurance then we must pursue the government to amend their law immediately. I think only the registered insurance companies are entitled to do insurance, because otherwise the government will be deprived of earning revenue. 

Bangladesh Post: Are you happy with the contribution of insurance industry to the GDP?

Sheikh Kabir: Insurance sector contributes .05 percent in the country's GDP. But now we believe that this contribution will be multiplied within a very short span of time if all the measures, we have mentioned above, are implemented effectively and timely. The revenue to the government exchequer from this sector may increase by at least Tk 1000 crore. Re-insurance opportunity will also contribute to the economy, and moreover, it will be possible to save a huge amount of foreign currency through re-insurance opportunity.

But it is hard to mention the ratio of contribution to the GDP as our premium in insurance is not increasing comparing to the ratio of GDP growth. 

Bangladesh Post: Negligence and fraudulence in claim settlement by the insurance companies is a repeatedly asked question. What is your impression?

Sheikh Kabir: Negligence in claim settlement by the companies is much less now-a-days. By the recent incident of 'Minister Fridge" factory, we saw that claim settlement took place instantly. Now we from the BIA also run monitoring in this regard. Even action is taken against those who are neglecting to settle claims timely without any valid reason. Some problems occur related to life insurance claim. But those who maintain all documents and other related things perfectly they normally get their claim timely. As there have certain laws in this regard so companies have no way to violate them.