Home ›› 27 Dec 2021 ›› Front
Although fire insurance policy aims to compensate the policy holders for the loss or damage due to fire, sheer ignorance of how the fire policy works affects the clients who find it hard to realise insurance claim.
In most cases, the policy buyers appear to grope their ways towards the insurance demand since they are not savvy enough to go through all the intricacies entailed in the policy.
Insurers offer different policies with varying rates of premium money. In most cases, clients open policies without conforming to conditions mentioned therein.
In the last five years, insurance companies collected Tk 7,783 crore as premium money while they paid only Tk 3,348 crore against the insurance claims marking only 43.01 per cent, according to a financial report issued by the Insurance Development and Regulatory Authority (IDRA).
In 2016, non-life insurance companies collected Tk 1,141 crore as premiums and paid only Tk 554 crore which marks 48.55 per cent.
In the following year, the amount of fire insurances climbed to Tk 1,195 crore against the insurance claim of only Tk 462 crore accounting for 38.66 per cent.
In 2018 and 2019, the amount of premium displayed an upward trend of Tk 1,709 crore and Tk 1,999 crore respectively and slipped slightly in 2020 with Tk 1,739 crore.
At the same time, after accidents fire insurance companies paid only Tk 907 crore, Tk 815 crore and Tk 610 crore to the companies in 2018, 2019 and 2020, respectively.
Why fire insurance is necessary
Fire insurance aims to shrink financial hazards triggered by different fire incidents, IDRA said, adding that fire insurance usually covers company buildings, different machines, furniture and goods-related businesses.
Besides, some insurance policies also cover company buildings along with all other assets inside them.
This type of policies not only corresponds to only fire incidents but also damages caused by floods, storms or earthquakes as well.
Rising importance of fire insurances
IDRA Executive Director and spokesperson SM Shakil Akhtar said many firms are forced to hold fire insurance as it is mandatory for getting loans from different banks.
Most of the companies avail fire insurances without fulfilling any necessary conditions of fire safety making it easy for insurance companies to adopt numerous strategies to escape payments to their clients.
Chief Executive Officer (CEO) of Sena Kalyan Insurance Company Limited Brigadier General (Retd) Md Shafique Shamim told The Business Post that the number of fire insurance policies is increasing in line with the rising number of industrial factories in the country.
Regulation should be formulated to bring multi-storey buildings under the fire insurance policies for further expansion of the sector, he suggested.
Prime Insurance Company CEO Sujit Kumar Bhowmik said: “Our major revenue or portfolio comes from fire insurances. Companies open insurance policies carelessly without noticing many important issues.”
Incorrect policy causes less payment of clients’ claims
Wishing to remain unnamed, an IDRA official said: “Loan receivers normally depend on banks to avail fire insurances. In many cases, the loanees don’t even know the names of insurance companies and the conditions attached with the policies.” Amid such circumstances, most of the policy holders struggle to recover their insurance claims while many fail to get money for not choosing a right policy, he added.
Things to notice before opening insurance policies
Firstly, insurance policy holders should notice that their companies have enough fire safety instruments, said Monzur Alam, vice-president, Electronics Safety and Security Association of Bangladesh.
Secondly, before getting any policy, they should also make sure that the insurer policy and the factory policy are in compliance with the Bangladesh National Building Code. Another basic issue is establishments of fire alarm system and fire hydrant system in factories which are mandatory for getting fire insurance, otherwise, insurance receivers won’t be eligible for getting money as part of insurance claim after accidents.
Sadharan Bima Corporation Director AKM Ihsanul Haque told The Business Post that before signing any documents, policy holders should read and inspect all necessary issues mentioned in the papers.
They have to remain aware about the basic conditions such as insurance amount, details on coverage and other conditions over claiming the insurance money after accidents, he pointed out.
