Five insurance companies fined Tk1.35cr - Share market analysis of dhaka stock exchange, Bangladesh
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01 December, 2014 10:06 AM Source: Dhaka Tribune
Insurance.jpg

An unhealthy competition among insurance companies continues unabated, prompting Insurance Development and Regulatory Authority (IDRA) to fine five of them recently for flouting rules.

The IDRA found that maximum companies are involved in doing business on credit, which led them to incur losses in the long run.

Business on credit in insurance sector refers to agreement signing for insurance coverage without taking required premium from clients.

IDRA imposed ban on such business in the year 2012 in the interest of company’s profit.

A major share of business in the insurance sector remains pending at every year end.

IDRA fined five insurance companies and its officials a total of Tk1.35 crore, getting proof of their business on credit and cash transaction.

The five companies are Standard Insurance, Meghna Insurance, Bangladesh National Insurance, Republic Insurance and Eastland Insurance. The board, managing directors and branch managers are the main beneficiaries of unpaid businesses, said a senior executive of IDRA.

He said the beneficiaries receive commission on unpaid premium from the clients instead of recovering dues, thus leading a heavy loss to the company.

The official said some companies were also found making cash transaction above Tk5,000 which is also a violation of rules.

IDRA restricted cash transaction of over Tk5,000 to remove financial irregularities, he added.

IDRA Chairman M Shefaq Ahmed said: “We have started to strictly monitor such business practices by insurance companies.”

The companies are yet to come out of bad business practices, he said, adding that most high officials were found involved in various financial irregularities through cash transaction and conducting business on credit. At the year end, 40% of total business in the insurance sector remains unrealised, he said.

Standard Insurance: IDRA investigation team visited Matijheel branch on September 30 this year and Faridpur branch on July 17, 2012 of the company and found proof of business on credit.

The authorities asked the company six times to attend the hearing for flouting rules, and imposed fines every time. The company officials admitted that they performed business on credit.

IDRA decided to fine Standard Insurance and its officials a total of Tk39 lakh. Of the total amount, the company was fined Tk30 lakh, its Managing Director Amar Krishna Saha Tk6 lakh and branch in charge Abdul Matin Sarkar Tk3 lakh.

Meghna Insurance: IDRA investigation team found the same illegal business practice, plus cash transaction over Tk5,000 while visiting the company’s Matijheel branch, Jubilee Road branch in port city and Narayanganj branch. The insurance company was called for attending the IDRA hearing seven times and fined a total of Tk45.5 lakh.

Of the total fines, Meghna Insurance was fined Tk40 lakh, its Managing Director Talukder Jakaria Hossain Tk7 lakh and branch in charge Tk3.50 lakh.

Bangladesh National Insurance: The concerned authority found that the insurance company conducts business by opening illegal branch without taking approval of authority, besides the business on credit.

IDRA fined the company a total of Tk24 lakh. Of the fines, the company was fined Tk20 lakh whiles its Managing Director Sanaullah Tk4 lakh.

Republic Insurance: IDRA found proof of business on credit against the company.

Following the findings, the authority imposed a fine of total Tk14 lakh on the company, plus its officials.

Of the fines, Tk10 lakh went to the company, Tk2 lakh to its Managing Director AMM Mahiuddin Chowdhury and Tk2 lakh to the branch in charge Sirajul Islam Bhuyan.

Eastland Insurance: IDRA fined the company a total of Tk13 lakh on the proof of its business on credit. Of the amount, the company was fined Tk10 lakh, its MD Arun Kumar Saha Tk2 lakh and branch in charge and DMD Shekh Ahsan Habib Tk1 lakh.


- Jebun Nesa Alo

 

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