After the fall of the Awami League government in a mass uprising led by students on August 5, significant changes have also taken place in the insurance sector, particularly in the much-discussed Fareast Islami Life Insurance Company Limited.
Over the past 20 days, five directors, including the chairman, have resigned from the company.
This situation has caused complications in processing insurance claims and conducting official operations. Chief Executive Officer Apel Mahmud is also not speaking to the media.
However, in an earlier conversation with The Business Post, Apel, who is also the managing director, mentioned that the company's insurance claim process was somewhat active. He expressed hope that many problems could be solved if the existing board remained in place.
But he acknowledged that not everything could be done swiftly considering the financial crisis.
On August 14, after Sheikh Kabir Hossain resigned from his position as chairman of the newly reconstituted board, Fareast Islami Life informed that Managing Director Apel was also not coming to the office. Several attempts to reach him over the phone were unsuccessful.
Sheikh Kabir was appointed as an independent director of Fareast Islami Life on February 10, 2022. He later assumed the role of chairman. He is also the president of the Bangladesh Insurance Association (BIA) and the chairman of Sonar Bangla Insurance Limited.
Since the government changed, he has not been fulfilling his duties at BIA. At a recent meeting between BIA leaders and Insurance Development and Regulatory Authority (IDRA) Chairman Zainal Bari, BIA First Vice President Nasir Uddin Ahmed was present as the acting president.
On August 19, the company’s Independent Director and Ekattor Television Managing Director Mozammel Haque also resigned. Shortly afterwards, three more directors resigned from the reconstituted board.
They are Dr Lafifa Jamal, provost of Shamsunnahar Hall and a faculty member at Dhaka University’s Robotics and Mechatronics Engineering Department; Dr Rafiqul Islam, a professor at Dhaka University’s Banking and Insurance Department; and Arif Khan, FCMA.
While the CEO is yet to say how Fareast Islami Life will operate now, IDRA spokesperson Jahangir Alam told The Business Post that the company’s capacity to pay insurance claims had been low for some time. The reconstituted board was formed to revitalise the company, but now that most of the members have resigned, a new decision will have to be made.
He said that IDRA would conduct an assessment and make a final decision on the matter.
Others on the reconstituted board included Md Ibrahim Hossain Khan and Sheikh Mamun Khaled. Additionally, Alhaj Helal Mia was appointed as a nominated director.
On December 21, 2023, IDRA instructed Fareast Islami Life Insurance not to spend its premium income, investment income or life fund income on anything other than repaying the dues to policyholders.
At the time, CEO Apel said that all possible steps were being taken to return customers' money, but it would take time.
An IDRA letter sent at that time mentioned that until September 2023, the company had settled only 4 per cent of its insurance claims. Of the claims worth Tk 2,351 crore, only Tk 96.58 crore had been paid.
In April 2021, IDRA appointed the chartered accountancy firm Shiraz Khan Basak & Co to audit Fareast Islami Life. The audit report, submitted to IDRA in May 2022, revealed that Tk 2,367 crore had been embezzled from the company. Additionally, irregularities amounting to Tk 432 crore were detected.
Former chairman Nazrul Islam, former director MA Khalek, former CEO Hemayet Ullah and several former directors and senior officials of Fareast Islami Life were found to be involved in the corruption.
The embezzlement primarily involved purchasing land at prices higher than market value and taking bank loans by mortgaging the company's Mudaraba Term Deposit Receipts (MTDR).
In September 2021, the Bangladesh Securities and Exchange Commission (BSEC) dissolved the board of Fareast Islami Life Insurance Company and dismissed Hemayet.
