Non-compliance biggest challenge, says IDRA chief

Non-compliance of regulations is the biggest challenge for the country’s insurance sector at present, Mohammad Jainul Bari, chairman of the Insurance Development and Regulatory Authority (IDRA) said on Wednesday.

“Due to lack of compliance in the sector for a long time, irregularities and corruption have taken root in many companies. This has resulted in many companies failing to pay their customers on time and caused a lack of confidence in the sector,” he said while addressing a programme organised by the Capital Market Journalists’ Forum (CMJF).

The programme titled ‘CMJF Talk’ was held at CMJF’s own office at Purana Paltan in the capital. CMJF President

Ziaur Rahman presided over the programme moderated by CMJF General Secretary Abu Ali.

Speaking on the occasion Jainul Bari said, “We are strictly monitoring the companies to ensure compliance in the insurance sector. Earlier, we used to fine only the companies for irregularities in the sector, but now we have decided to fine the individuals responsible as well. In addition to taking legal action against companies for various irregularities, if necessary, we will also dissolve their board of directors.”

Speaking about the poor state of some companies, the IDRA chairman said, “The financial condition of some companies is so bad that they should be closed down. But doing so will only cause the customers to suffer more as the companies will not be able to pay their dues. Hence, we are prioritising to bring companies out of crisis with strict monitoring and other support rather than shutting them down. However, if that does not work, we may have to ultimately close them down.”

Stating that in the past, most of the corruption in the insurance sector was centred around land acquisition, he said there have been incidents where a company has bought a Tk 1 crore worth of land at Tk 30 crore. But later they could not sell the land even after 10-15 years. Now, no company is allowed to buy land unless it is urgent and the price is not reasonable.”

Responding to a question about payment of insurance claims, he said no one would be allowed to syphon off money or embezzle assets of customers.

“We have held meetings about this with the board of directors of the companies’ facing complaints regarding the payment of insurance claims. They have been ordered to pay the customers even if they have to do so by selling company assets. If the instructions are not followed, the board of the company will be dissolved if necessary.”

Speaking about initiatives by IDRA to solve the problems of the sector, he said, ‘We have taken an initiative to make the Insurance Act timely through amendment. While implementing this law, we have seen that in some places, there are inconsistencies and various ambiguities.

“The law asks for regulation in so many sections that are completely unenforceable. Therefore, it is necessary to amend it. The drafting of the amendment has already begun.”

The IDRA chairman urged everyone to come together in solving the existing problems in the insurance sector.

He also suggested introducing new products, ensuring transparency and accountability in the sector to increase insurance penetration in the country which is lagging behind many countries including India.