The Insurance Development and Regulatory Authority (IDRA) has warned the chief executive officers (CEOs) of all life and non-life insurers of strict action if they enjoy extra facilities other than their salaries.
It sent a letter, signed by its Chairman Mohammad Zainul Bari, to the chairmen of all life and non-life insurance companies in the country in this regard on Monday.
The letter said the CEOs of some insurance companies are taking additional benefits beyond their salaries and allowances, which is contrary to the Insurance Act 2010. Strict action will be taken against these companies according to the act.
The letter also said some insurance companies’ CEOs are taking various benefits, such as performance bonuses, profit bonuses, guest allowances, and provident funds, in addition to their salaries and allowances, which is against the insurance law.
To prevent such practices, the IDRA issued the directive to ensure transparency in the insurance sector and protect the interests of policyholders.
Management costs consist of direct and indirect expenses of insurance companies, according to the Insurance Act 2010.
The act has already set a limit on management costs, which should be followed by insurers. This cost indicates insurers’ affirmative financial conditions.
On the contrary, excessive management costs cut short assets, reduce investment return, and reflect the fragile financial conditions of insurers.
An official of the IDRA said management costs of insurance companies are comparatively higher than that in many other countries.
“In the past few years, excessive costs reduced to some extent due to different steps and fines imposed by the IDRA.”
