IDRA decides to install software to monitor insurance transactions

Jasim Uddin Haroon | Published: December 20, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

Based on recent findings on fraud, the regulator is devising digital ways of checking financial irregularities in the insurance industry.
The Insurance Development and Regulatory Authority (IDRA) has made its maiden move to develop computer technology that will monitor every transaction in each of the 77 insurance firms in the country.
It is now seeking international consultants for appointing firms for the development of programme that will meet authority's demands.
Currently, insurance firms provide manual documents to the authority that, in many cases, do not reflect the reality or distort picture about the transactions.
IDRA sources said many do not comply with the circulars and directives issued by the authority to check unethical practices.
Evasion of value-added tax (VAT) and taxes, and providing higher commission to the clients hinder ensuring a level playing field in the sector.
And the widespread allegations against the industry are delay or complexities in settling claims.
"It is hardly possible to check all transactions physically. For this reason, we want computer technology that will show us every financial transaction whenever we want," said a source familiar with the development.
M Shefaque Ahmed, chairman of the IDRA, told the FE: "This will be a key achievement by the authority if the plan becomes successful."
He said the regulator will prefer an internationally reputed firm to prepare the software.
Official sources said they had issued a large number of circulars to streamline the industry but mostly did not work as planned.
They said the authorities have yet to stop providing higher commissions to the clients applied in non-life organisations.
"We've been conducting hearing almost each month and penalising firms, but the practice remains rampant," he said.
He said many insurance companies pledged to abide by the rules and orders, but they found many having failed to do so.
He cited a survey conducted by the Authority recently that reveals that most of the life insurers had exceeded their allowable management expenses.
This deprives policyholders in terms of getting financial benefits.
Management expenses mainly involve business-procurement cost that surpassed the limits by nearly 77 per cent on part of many companies, according to the survey.
The insurance regulator conducted a survey on 13 life-insurers for a period of five years ending 2013.
All the 13 spent extra amounts of more than Tk 2.62 billion upon their limits only in 2013, the analysis showed.
It was found out that a life firm had liabilities worth Tk 2.0 billion and despite that fact, it had life fund worth Tk 1.95 billion.
One life company took a loan of Tk 1.0 billion from a commercial bank that was not necessary for the company as it has a big amount of surplus life funds.
Sources at the IDRA said it wants to install the latest programme within March next.
"We've found eight applications for the appointment of consultants, and we're now scrutinising them," he said.
The successful consultant will advise what way the watchdog should tread to check confidence tricks in insurance.
jasimharoon@yahoo.com