Aziz advises weak insurance cos to consider merger
Wednesday, 11 July 2007
FE Report
Finance and Planning Adviser Mirza Azizul Islam Tuesday asked the weak insurance companies to think on 'merger and acquisition' (M&A) and also comply with the standard corporate governance policies.
"You can think of the merger to end the financial burden as faced by some of the companies but you have to shun all unethical practices being done by a section of insurance companies," Mirza said while addressing a workshop titled 'Contribution of insurance to Bangladesh economy' arranged by the Bangladesh Insurance Association (BIA).
He said that the sector is expected to see some positive changes very soon with the revised laws for the insurance sector. The laws are Insurance Regulatory Authority Act, Insurance Act and Takaful (Islamic insurance) Act.
"The cabinet will soon approve the amended laws which will bring the sector under the finance ministry from commerce ministry," he said.
BIA vice chairman Nizam Uddin Ahmed gave welcome address while BIA executive committee member Abdul Matlub Ahmad presented a keynote paper.
Chairman of Eastland Insurance Company Ltd Mahbubur Rahman, managing director of Green Delta Insurance Co Nasir A Choudhury, Chief Controller of Insurance (CCI) Mahfuzul Huq and managing director of Pragati Insurance Ltd AKM Rafiqul Islam also addressed.
The Finance Adviser, also in charge of commerce and post and telecommunications, asked the insurance companies to go for 'soul-searching' to clean the irregularities.
"A section of sponsor directors of the insurance companies are involved in the quarrels and this is affecting the overall business," he said adding the sector does not need external pressure to develop.
He accused some of the insurers of taking unethical means to attract more business and evade tax.
"The management costs shown in some of the financial statements of the insurance companies are not true," the adviser regretted.
Chairman of Eastland Insurance Company and also president of International Chamber of Commerce-Bangladesh, Mahbubur Rahman said 45 per cent corporate tax for the insurance companies is much higher as compared to other neighbouring countries.
He thanked the CCI Office for the strong monitoring system launched recently.
"The physical visit to the insurance companies by the CCI Office as part of strong monitoring should continue on regular basis," he said.
Mahbubur Rahman stressed the need for modernisation of insurance laws, improving the human resource in CCI Office and creation of new investment windows for proper utilisation of insurance funds.
The keynote paper demanded withdrawal of the compulsory placement of 50 per cent reinsurance by the private general insurance companies with state-owned Sadharan Bima Corporation (SBC).
"As a result of dual functions -- underwriter and reinsurer -- the SBC cannot properly function as a professional reinsurer and make inordinate delay in settlement of claims," the paper said.
It said over 274 claims involving Tk 1.64 billion with insurance companies still remain outstanding over the years.
By not settling the claims, the SBC is being deprived of huge funds in foreign exchange, Matlub said in the paper.
At present, in compliance with the Insurance Corporations Act, 1973, it is compulsory for the general insurance companies to reinsure 50 per cent of their surplus liability/risks with the SBC and the remaining 50 per cent has been made voluntary to either place within or outside the country.
Only three private companies -- Green Delta, Progati and Karnaphuli -- do their 50 per cent reinsurance with foreign companies.
"If allowed, we won't go to the SBC where most of the knowledgeable officers have either left or retired from the government office leaving a great vacuum therein," one managing director of a leading private insurance company told this correspondent.
Finance and Planning Adviser Mirza Azizul Islam Tuesday asked the weak insurance companies to think on 'merger and acquisition' (M&A) and also comply with the standard corporate governance policies.
"You can think of the merger to end the financial burden as faced by some of the companies but you have to shun all unethical practices being done by a section of insurance companies," Mirza said while addressing a workshop titled 'Contribution of insurance to Bangladesh economy' arranged by the Bangladesh Insurance Association (BIA).
He said that the sector is expected to see some positive changes very soon with the revised laws for the insurance sector. The laws are Insurance Regulatory Authority Act, Insurance Act and Takaful (Islamic insurance) Act.
"The cabinet will soon approve the amended laws which will bring the sector under the finance ministry from commerce ministry," he said.
BIA vice chairman Nizam Uddin Ahmed gave welcome address while BIA executive committee member Abdul Matlub Ahmad presented a keynote paper.
Chairman of Eastland Insurance Company Ltd Mahbubur Rahman, managing director of Green Delta Insurance Co Nasir A Choudhury, Chief Controller of Insurance (CCI) Mahfuzul Huq and managing director of Pragati Insurance Ltd AKM Rafiqul Islam also addressed.
The Finance Adviser, also in charge of commerce and post and telecommunications, asked the insurance companies to go for 'soul-searching' to clean the irregularities.
"A section of sponsor directors of the insurance companies are involved in the quarrels and this is affecting the overall business," he said adding the sector does not need external pressure to develop.
He accused some of the insurers of taking unethical means to attract more business and evade tax.
"The management costs shown in some of the financial statements of the insurance companies are not true," the adviser regretted.
Chairman of Eastland Insurance Company and also president of International Chamber of Commerce-Bangladesh, Mahbubur Rahman said 45 per cent corporate tax for the insurance companies is much higher as compared to other neighbouring countries.
He thanked the CCI Office for the strong monitoring system launched recently.
"The physical visit to the insurance companies by the CCI Office as part of strong monitoring should continue on regular basis," he said.
Mahbubur Rahman stressed the need for modernisation of insurance laws, improving the human resource in CCI Office and creation of new investment windows for proper utilisation of insurance funds.
The keynote paper demanded withdrawal of the compulsory placement of 50 per cent reinsurance by the private general insurance companies with state-owned Sadharan Bima Corporation (SBC).
"As a result of dual functions -- underwriter and reinsurer -- the SBC cannot properly function as a professional reinsurer and make inordinate delay in settlement of claims," the paper said.
It said over 274 claims involving Tk 1.64 billion with insurance companies still remain outstanding over the years.
By not settling the claims, the SBC is being deprived of huge funds in foreign exchange, Matlub said in the paper.
At present, in compliance with the Insurance Corporations Act, 1973, it is compulsory for the general insurance companies to reinsure 50 per cent of their surplus liability/risks with the SBC and the remaining 50 per cent has been made voluntary to either place within or outside the country.
Only three private companies -- Green Delta, Progati and Karnaphuli -- do their 50 per cent reinsurance with foreign companies.
"If allowed, we won't go to the SBC where most of the knowledgeable officers have either left or retired from the government office leaving a great vacuum therein," one managing director of a leading private insurance company told this correspondent.