Being a Finance professional in life insurance sector I have been involved with financial reporting for statutory deadlines. One thing concerned me very much that is whether we are ready to prepare financial statements with high voltage accounting standards IAS, IFRS (adapted in Bangladesh as BAS, BFRS) or just reluctant for the statutory requirements. I am thinking about this because publishing financial statements is a very challenging task if you want to do it with time constraint and maintenance of proper standards. Life insurance companies are very new in Bangladeshi business and integrated reporting concepts if we just keep our government-owned and foreign insurance companies aside.
Foreign companies which have already established branches in Bangladesh are much matured and government organisations don't have to face regulatory issues as much as private companies because those are not listed. We know that at the end of the day listed companies are much exposed to any issues. At first let us have a blueprint about the number of statutory reports a listed life insurance company needs to submit over the year. For a listed company it is mandatory to submit three quarterly reports which are un-audited and a one-year-end report which is audited. These reports are sent to SEC (Securities and Exchange Commission) and DSE (Dhaka Stock Exchange). Also IDRA (Insurance Development and Regulatory Authority) has its own demand of getting financial reports in other prescribed formats. RJSC (Registrar of Joint Stock Companies and Firms) also has a return to be submitted by the companies that are registered with them. My point is not to talk against statutory demand but to let everyone just start thinking whether we are facing reporting overload.
Now let us analyse what we are doing in a developing sector and what we can do for the betterment. I am terming life insurance a developing sector because still we are not specific with our business function type (sometimes full service model or agent based or a mixture), many products are yet to be introduced, efficiency and skilled professionals are in shortage also push marketing is still the key to earn premiums.
As a developing sector it is obvious that companies need to be busy with business development activities, new product designing, cost efficiency and proper resource allocation issues etc. We know when a company is in a maturity stage, then the cost control issue becomes the key factor whereas the life insurance sector is most of the time getting pressure of cost control and it has become one of the main key performance indicators. Now it is necessary to think about the time and effort we usually give to management reporting, proper budgeting, performance management system development and how much time we spend for so much statutory reporting that has strict deadlines. Here we see absence of performance management system though it is very important in today's business environment. Performance Management System is a tool which enables strategic decision makers to align overall organisational objectives with operational performance measurement. Performance measurement can be of two types -- financial and non-financial. So we can see we are much busy with financial performance that is mainly influenced by statutory financial reporting over time.
Most of the life insurance companies are in developing stage of Information Technology for a better financial control system whereas we are much busy with international standard financial reporting within time that may lose qualitative characteristic as the transaction volume is so massive for large organisations. Here a difference exists with banks, other financial institutions and manufacturing companies which are performing in more matured sector and have already got enough developed reporting systems and efficiency through standard and substitute IT systems. If we expect same quality report within same time, then there is possibility of publishing financial reports that are not up to the mark and users can't make best out of that reporting.
It is much necessary to have good quality financial reporting for the stakeholders as this is the best practice and is comprised of ethical standards also. But other sectors that are already developed, own better efficiency and IT infrastructure get enough time to become developed. The life insurance sector and other developing sectors are in the middle of that development. Obviously this sector will also be one of them in near future if it is given proper scope to flourish. Discretion can be given while demanding reports as per maturity and type of business sector. A common problem arises when the authority demands reports in a format that is not compatible to life insurance companies or easily understandable. The authorities can also think of setting different formats for categorised business sectors while demanding various returns. Also, IDRA can encourage companies to establish a better management reporting environment. If we want to have good quality financial reporting in this modern era, then we have to develop our Performance Management Systems which can produce quality management reporting. Doing good quality and relevant management reporting on performance measurement issues can ensure us good budgeting as well as help towards business development activities. We need to develop our IT infrastructure to achieve this. Management reports focus mainly on internal financial and non-financial issues rather than any pressure of standard maintenance unlike financial reporting. It will also help us in near future to establish proper strategic management information systems with internal as well as external focus. If we can maintain a balance and give adequate effort on management reporting and financial reporting, then hopefully we can get financial reporting that will be more credible and achieve its qualitative characteristics. Auditors can also contribute and influence companies to give importance on good Performance Management Systems while auditing of companies and giving opinions. Finally numbers are not the main issue; it is the value which is now widely accepted around the business world.
The writer is Senior Vice President and In-Charge Administration, Fareast Islami Life Insurance Co. Ltd. Email: asifaziz2k2@hotmail.com
Statutory reporting of life insurance companies
Syed Asif Aziz | Published: April 19, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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