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Insurance company boards of directors are reportedly hindering the industry’s growth by refusing to hire honest, competent, and efficient employees and by giving their CEOs little room to work independently.
The claim has been made by insurance company CEOs, as well as the Insurance Development & Regulatory Authority (IDRA).
IDRA Executive Director SM Shakil Akhtar said that although it was the board’s responsibility to give CEOs complete freedom in their work, the reality was quite the opposite.
Meanwhile, Sheikh Kabir Hossain, president of the Bangladesh Insurance Association (BIA), an association for insurance companies, claimed that a handful of insurance company owners and managing directors (MDs) were responsible for the fact that insurance CEOs did not have complete freedom.
Not all owners have the best interests of the industry in mind, he says, adding that it is true that they use their CEOs to protect their own interests.
There would be no end to this issue if the CEOs of the companies did not speak out and inform us of the matter, added Kabir, also the chairman of Sonar Bangla Insurance Ltd.
He went on to say that he frequently met with the owners and CEOs of insurance companies on behalf of the association to discuss the allegations of the aforementioned irregularities. But the CEOs never brought these issues up in those meetings.
“They need to tell us about their problems without fear. Only then, hopefully, will the issue be resolved. They always have the option of speaking with me alone if necessary,” added the BIA president.
Moreover, according to the IDRA, insurance company boards of directors were allegedly violating rules regarding the appointment and removal of CEOs.
Speaking to The Business Post, BM Yusuf Ali, president of Bangladesh Insurance Forum (BIF), said, “For any appointments or dismissals, an insurance company must issue a notice in advance.”
“However, this rule is rarely followed, and most companies fire CEOs without warning,” added Yusuf, who is also the CEO of Popular Life Insurance Co Ltd.
As such, the IDRA is now seeking direct control over the appointment of CEOs, CFOs and company secretaries to facilitate the sector’s growth.
In this regard, IDRA Executive Director SM Shakil Akhtar said, “If the power to appoint three primary positions, namely company secretaries, CFOs, and CEOs, is directly delegated to the IDRA for the development of the insurance sector, the sector’s accountability will improve.”
He added that the insurance sector is not developing due to a lack of good intentions on the part of company owners.
He went on to say that if the boards were sincere in appointing qualified CEOs, many issues inside the industry could be resolved.
Call for corporate culture
The insurance CEOs’ association has called for the adoption of a corporate culture similar to that of the banking industry.
To this end, the regulatory body IDRA has been urged to come forward.
BIF President BM Yusuf Ali said, “If the IDRA takes strong action on various irregularities involving insurance company CEOs and compels the boards to comply with the law regarding their recruitment and removal procedures, the CEOs in the insurance sector will be as strong as bank CEOs.”
In this regard, Jalalul Azim, CEO of Pragati Life Insurance Ltd, said it was the responsibility of the owner as well as the board to prepare the policy. “However, interfering with daily activities is not appropriate.”
If the IDRA can keep a close eye on insurance companies, it can protect CEOs while also fostering a corporate culture.
He went on to say that if a CEO is fired without notice, he or she must be compensated according to the terms of the agreement.
Companies operating sans CEOs
A total of nine insurance companies are currently operating without CEOs, which is a violation of the Insurance Act 2010.
According to a provision in the act, if the position of CEO remains vacant for a maximum of six months, the company must appoint an administrator.
Nonetheless, in some insurance companies, even after the position of CEO had been vacant for years, administrators were not appointed.
The nine companies are Alpha Islami Life Insurance Ltd, Best Life Insurance Ltd, Guardian Life Insurance Ltd, Protective Islami Life Insurance Ltd, Akij Takaful Life Insurance PLC, Sunlife Insurance Company Ltd, Mercantile Islami Life Insurance Ltd, Bengal Islami Life Insurance Ltd, and Chartered Life Insurance Co Ltd. Alpha Islami Life Insurance has been without a CEO since 2019, while Mercantile Islami Life Insurance, Bengal Islami Life Insurance, and Chartered Life Insurance are in the process of appointing their current acting-CEOs to the position of CEO.
Speaking on the issue, IDRA Director (Life) Shah Alam said that many of the applicants may not meet the qualifications for the position of CEO, which is why the CEO hiring process at some organizations is taking so long.
He went on to say that most insurance companies’ boards of directors wanted to appoint a CEO of their choosing in order to control the company’s operations and gain some ‘unethical’ advantage.
In this regard, BIF President BM Yusuf Ali said, “Although many people have the qualifications to be a CEO, they sometimes lack experience. Because the insurance industry used to be so small, it was easier to find experienced CEOs earlier. However, as the number of insurance companies is growing, experienced CEOs are becoming scarce.”
