The country's insurance industry is set to multiply its contribution to the GDP soon as several initiatives are planed while some measures are already underway including settling down of commission issue, re-insurance in private sector and modernization of the insurance academy, to achieve the target.
Sheikh Kabir Hossain, President of Bangladesh Insurance Association (BIA), told The Bangladesh Post on Thursday that once there was an unhealthy competition in the insurance sector, in terms of business and commission.
"We tried several times to stop these irregularities but failed. It was our failure or we can say that there was a lack of cooperation and coordination among us. This time we all together, under the leadership or cooperation of the regulatory body, the Insurance Development and Regulatory Authority (IDRA), have taken a concrete decision in regard to the insurance commission of 15 percent including the government's VAT and Tax. The decision was taken with joint efforts of the top executives of the insurance companies and the IDRA", said the BIA President.
Sources said the IDRA has already issued several circulars for the companies for strict implementation of the decision. BIA sources said that to materialize the decision effectively and strictly, they will provide all-out support to the regulatory body. The IDRA has already formed a monitoring committee to go for punitive measures in terms of violations of the rules regarding commission. It was named as 'surveillance' committee where they kept representation of the BIA but the BIA requested the IDRA to avoid its representation in this regard so that the question of any conflict of interest may not rise.
Sheikh Kabir said that the challenge is that earlier they were not able to decide about the percentage of commission because companies did it according to their will due to having no executive order from the regulatory authority. " Recently, we have come to another understanding that we will no more allow snatching away of one’s business by another. The BIA will also keep it in sharp monitoring. If anyone lodges complaints in this connection we try to settle the dispute through investigation and discussion", he added.
Finance Minister AHM Mustafa Kamal last week said ' the Sadharan Bima Corporation' is providing insurance coverage to the ongoing mega projects of the country as a result the organisation will be able to deposit more revenue to the government exchequer”. The finance minister made the comment while briefing newsmen after the cheque handing over ceremony for Tk 50 crore of the Shadharan Bima Corporation, as dividend to the government exchequer.
Kamal said the Sadharan Bima Corporation is providing insurance and re-insurance services at a time also paying dividend to the government exchequer every year.The finance minister also sat with the BIA, the IDRA and other relevant stakeholders of the sector recently to discuss how to develop the sector.
He said no re-insurance to go outside the country. The BIA also was requesting the authority from long back in this regard so that any re-insurance may not go out of the country, he added."It is said that we have no strength of maintaining re-insurance, but we don’t believe it", Kabir added.
The BIA will make a demand to approve a re-insurance company from private ownership, because then there will be competition. It may be more than one in number if the government approves. The BIA also wishes to withdraw the third party insurance of the motorized vehicles, because it has no visible coverage that can create any benefit for the government.
The BIA emphasized on setting up of effective Insurance Academy for developing skilled human resources viewing that the existing Insurance Academy is not working effectively.
The BIA expressed its worry over some NGOs engagements in providing re-insurance coverage illegally."I think it should be stopped as soon as possible. We raised this issue also to the finance minister and he assured us of taking measures soon in this regard. There might have something in their laws in regard to providing insurance coverage, what we have to look into", said a BIA leader.
The insurance sector contributes .05 percent to the country's GDP. But now it is believed that this contribution will be multiplied within a very short span of time if all the measures are implemented effectively and timely.