SBC opposes 50pc overseas insurance coverage

Syful Islam | Published: March 09, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

The state-owned Sadharan Bima Corporation (SBC) differs with a decision taken at the Prime Minister's Office (PMO) allowing public-private partnership (PPP) projects to have 50 per cent overseas insurance coverage, officials said.
SBC managing director Shamim Akhter in a letter has informed the Ministry of Finance (MoF) about their position regarding the decision meant for encouraging investment under the PPP paradigm.
"SBC is capable enough of providing insurance coverage to any public establishments. If the PPP projects are allowed to have coverage from outside the country, the funds will go abroad, hurting business of local insurance companies," the MD told the FE about their opinion.
In the face of lukewarm response for investment under PPP, a concept introduced in fiscal year 2009-10 for the first time, the government is now devising incentive packages.
The PMO at a recent meeting had decided to allow 50 per cent insurance coverage from abroad for projects under PPP initiatives and asked the Insurance Development and Regulatory Authority (IDRA) to issue an order to this effect.
The IDRA later sought opinion on this matter from the SBC which found the decision conflicting to section 19 of the Insurance Act 2010 under which the insurance sector is regulated.
Explaining the legal provisions, the SBC managing director, Ms Akhter, said under the insurance act in force there is no scope for outsourcing insurance from abroad for any Bangladeshi property or interests.
She said being a public-sector non-life insurance outfit the SBC provides risk coverage to all types of government and private properties. The SBC, alongside offering risk coverage, also underwrites the reinsurance of the properties.
The corporation has institutional and financial capacity to provide insurance coverage for all types of property and interests of the country, she noted.
"If the PPP projects are allowed to have 50 per cent insurance coverage from abroad, a certain portion of the insurance premium will go out of the country, hurting the economy and throwing the insurance companies into trouble," Ms Akhter added.
Besides, she said, complexities will arise in fixing which portion of the property will be insured locally and which one overseas.
Presently the SBC is underwriter of cent-percent insurance coverage of all types of public property.
When contacted, deputy manager of PPP office Mohammad Abul Bashar told the FE that steps are there to make policies as flexible as possible to attract investment under public- private initiative.
"If necessary," he said, "the issue will be discussed bilaterally with the SBC and finance ministry bosses to offer attractive incentives to investors under PPP."
Mr Bashar also said alternative decision will be taken if allowing foreign insurance coverage for PPP projects pose real harm to local companies.
Â syful-islam@outlook.com