Islami Commercial Insurance Company Limited (ICICL), a publicly traded firm, entered into an agreement with Confidence Software Limited (CSL) on November 18, 2015, for the implementation of the 'IIBS Software', which would supposedly be implemented within six months at the payment of Tk 11,00,000.
However, according to an auditor, Islami Commercial Insurance does not have the software from the developer even after nine years, as it is still in the development stage.
Recently, a certified auditor reviewed the insurer's financial reports for the year ending December 2023 and issued a statement suggesting that the financial information provided by the insurance company is limited in scope and that the company has not maintained generally accepted accounting principles.
Regarding the delay, ICICL Company Secretary Akhtaruzzaman told The Business Post that he acknowledges the ongoing challenges in fully comprehending the issues and that the software is still in the development stage due to the IDRA-mandated updates.
The auditor has stated, "The company (ICICL) has entered into an agreement on November 18, 2015 with Confidence Software Limited (CSL) for the implementation of the 'IIBS Software' and as per the agreement the software will be implemented within six months and ICICL has paid Tk 11,00,000 against the software. As per our review, the software is still yet to be implemented."
According to the company's financials, the allowable management expenses for the year ended December 2023 were fixed at Tk 16.39 crore, while the company spent Tk 24.71 crore, some Tk 8.32 crore more than the fixed amount.
Allowable management expenditure refers to expenditures for managing insurance activities, especially agent commissions and operating expenses, authorised by the Insurance Development and Regulatory Authority (IDRA). IDRA fixes this limit based on total premium income within a year.
According to the rules, insurers can spend a certain percentage of the money they receive in the form of premiums from fire and other types of insurance, except for marine insurance, which is treated somewhat differently.
Regarding the excess expenses, IDRA spokesperson Jahangir Alam commented that a company can’t settle insurance claims on time if it spends more than the prescribed limit. If it does, the company is called for a hearing and asked to submit documents related to additional expenses. After receiving them, further action is taken.
After reviewing Islami Commercial Insurance Company's 2023 financial report, the auditor stated, "In accordance with the provisions outlined in the Insurance Act 2010, the reimbursement must be disbursed (claim settlement process) within 90 days following the submission of the surveyor's conclusive report. The company has made some claim payments after 90 days, which needs to be avoided in the near future.
The auditor draws attention to the financial statements of 2023, which indicate that the company has failed to comply with the requirements issued by the government through a gazette notification on November 14, 2019, which mentions that all Non-life insurance companies should invest at least 7.5 per cent of their assets in government securities.
However, according to the auditor, ICICL has invested 6.38 per cent of insurer assets in government securities.
Islami Commercial Insurance started trading on the Dhaka Stock Exchange (DSE) on December 18, 2022, at a face value of Tk 10 per share. The company has raised Tk 20.20 crore from the capital market. It has announced a 10 per cent cash dividend for the year 2023. The annual general meeting is scheduled for July 24, while the record date is set for June 10.
The last trading price of each share of the company on the Dhaka bourse was Tk 26.80 on Wednesday.
