A number of garment factories face problem in renewing or getting fresh insurance policy for their fixed property as insurers are reluctant to underwrite risk due to looming volatile situation in the sector, officials and industry insiders said Friday.
They said insurance companies are now cautious about renewing or underwriting fresh policy as there is a fear of more unrest in garment sector.
"I have instructed my underwriting department not to renew or issue fresh insurance policy in the name of those factories that are at higher risk of unrest," said a managing director of an insurance company on condition of anonymity.
He said it was reported in a number of newspapers that angry workers went on rampage and set ablaze Mim Design Sweater factory in presence of law enforcers at Gazipur industrial area recently.
Against this backdrop, senior official of another insurance company said: "We can't renew or issue fresh insurance coverage for the factories, which are situated at risk prone areas."
Additional managing director of Islami Insurance Company Ltd Mujibur Rahman said: "We have no scope to underwrite policy under the present situation."
He said an insurance company will also face problem in getting reinsurance coverage.
Owner of a garment factory said: "I have been refused by an insurance company to renew my policy that expired last week because they think my factory is located at one of the risk prone areas."
Senior official of an insurance company said: "We are trying to avoid issuing or renewing 'fresh fire and allied' and 'burglary and housebreaking' policies except for some companies which are our prospective clients."
The official said the country's insurance sector recorded huge amount of losses on account of settling a good number of insurance claims in 2006 following months of unrest in apparel industry.
Mohammed Sabbir Ahmed, head of Audit and Internal Control of Reliance Insurance Company Ltd, said: "We are taking risk after assessing properly the risk factors because we settle claim."
"We have reputation in settling claims. So, we can't underwrite those which are already at risk," he said.
"This is not a professional attitude. In our good days the insurance companies will cover risk but when we are at trouble they are reluctant to take risk," said Anwar Ul Alam Chowdhury Parvez, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Chairman of Bangladesh Insurance Association (BIA) Rafiqul Islam said: "I have no knowledge whether any company is refusing to underwrite risk. But I think the insurance companies should underwrite risk of manageable incidents as part of their professional duty."
Mr. Islam, also managing director of Pragati Insurance Company Ltd, favoured union activities saying this will help minimise risk factors in the garments sector.
