Home ›› 13 Jul 2022 ›› Front
The insurance regulator is planning to bring all reinsurance brokers, who provide financial protection to insurance companies, under a fresh set of legal frameworks in order to ensure transparency and accountability in the sector.
Under the new regulations, brokers won’t be allowed to sell reinsurance without first acquiring a license at a yearly fee of Tk 1 lakh from the Insurance Development and Regulatory Authority (IDRA).
In light of claims that brokers have been causing numerous problems for non-life companies, the government intends to impose some regulations in order to bring discipline to this industry, according to the IDRA.
To this end, a draft regulation titled ‘Non-Life Reinsurance Regulations-2022’ has been prepared and submitted to the finance ministry for approval.
The draft regulation, once published as an official gazette, will outline some requirements that reinsurance brokers must satisfy to obtain registration, which include:
1. Brokers will be required to register with the IDRA before they can sell reinsurance to any domestic or foreign insurance company.
2. Other than a licensed reinsurance broker, no person, group, or broker will be permitted to sell reinsurance.
3. Foreign reinsurance brokers must submit a copy of their license obtained from the relevant authorities in order to be listed by IDR.
4. A reinsurer must hold a license for a minimum of five years in order to sell reinsurance overseas.
5. It will be necessary to submit the profile and financial report related to the reinsurance broker’s business operations.
6. Domestic non-life companies must have five years of experience in the reinsurance business in order to obtain a license from IDRA.
7. They should also have personnel on staff who have at least 10 years of experience in the non-life insurance sector.
8. A foreign broker must show a certificate attesting to three years of experience in the sector to obtain an IDRA license.
Brokers who apply and meet all IDRA requirements will receive a one-year license.
Benefits of new regulations
Once registered, brokers will be subject to transparency and accountability, and they won’t be able to charge commissions arbitrarily.
Experts in the field believe this will allow for the formulation of appropriate policies, making the reinsurance industry simpler for non-life insurance companies.
At present, there are 79 insurance companies operating in the country, of which 33 are life and 46 are non-life companies.
AKM Ehsnul Haque, general secretary of the Bangladesh Insurance Professionals Society (BIPS), said, “Everywhere in the world, brokers are typically used to sell general insurance and life insurance services. Highly qualified brokers are the ones who are in charge of risk management in the reinsurance sector.”
“If these brokers are registered, it will lower risks for companies in the reinsurance sector. If the policy is carried out properly, insurers will receive owed claims, minimizing the likelihood of financial loss.” added Ehsnul.
Brig Gen (retd) Shafique Shamim, CEO of Sena Kalyan Insurance, said, “Brokers were earning extra money by charging commissions at random for reinsurance. Once they are listed on the IDRA, brokers will be subject to a system of accountability.”
He further said, “If the regulations are issued, reinsurance businessmen will be free from harassment. Insurance companies have faced many problems because of brokers, like failing to obtain coverage. So, it’s very important to bring the brokers under registration.”
IDRA Executive Director SM Shakil Akhter said, “Since there is no legal requirement in the country for brokers to be registered for reinsurance, IDRA has taken the initiative to do so.”
“To this end, a proposed regulation has been delivered to the finance ministry for approval. If the ministry publishes a gazette on the draft regulations, reinsurance operations will be simpler on a national and international level,” he added.
