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Most of the policies of Padma Islami Life Insurance Ltd have lapsed due to alleged irregularities and harassment of its clients during their claim settlements.
The data available with Insurance Development and Regulatory Authority (IDRA) showed that a total of 105,563 policies of the insurance company lapsed in the last five years. Of them, 22,595 polices lapsed in 2018 while 22,793 in 2019, 27,494 in 2020, 16,368 in 2021 and 16,313 in 2022 (unaudited). Despite a change in ownership and management in 2018, the insurer continued incurring losses due to low premium income, lapsed policies and excessive management cost.
According to the official data, the company’s management cost totalled Tk14.40 crore in 2021 while its excessive management cost was Tk2.51 crore against allowable management cost of Tk11.89 crore.
In 2022 (unaudited), the company’s total management cost was Tk 22.72 crore while its excessive management cost was Tk4.86 crore in 2022 against allowable cost of Tk 17.86 crore.
An excessive delay in payments and servicing of the policy leads to a lapsed policy. But it might be revived by fulfilling the terms and conditions as per the policy statement.
Padma’s life fund turned into negative for huge expenditure. The IDRA data showed that the company had a negative life fund of Tk 3.84 crore at the end of 2020. But the situation improved in the last two years as it had a surplus of Tk 12.46 crore in 2021 and Tk 2.67 crore in 2022 (unaudited).
Talking to The Business Post, an official of the insurance company blamed the previous board of directors and management committee’s “irregularities, corruption and inefficiency” for the declining business.
Despite frequent attempts over phone, company’s managing director and CEO Morshed Alam Siddiqui could not be reached for his comments in this regard.
The company’s financial reports showed that its gross premium was Tk 48 crore in 2020 which fell to Tk 36.63 crore in 2021 and increased to Tk 42.78 crore in 2022 (unaudited).
Seeking anonymity, an IDRA official said that Padma and other life insurance companies are gradually losing their financial capability to settle claims. Insurance companies used to take premiums, but made lots of excuses while settling claims.
“We will investigate into irregularities and take stern action against those responsible if we find them guilty,” he added.
S Alam Group has a majority stake in the capital market-listed company whose share price dropped to Tk 49.6 (Wednesday) from Tk62.1 in November 22 last year.
