Govt moves to stop NGOs’ insurance business

The government has moved to stop running of unauthorised insurance business by the non-government organisations (NGOs), officials said.
The Ministry of Finance (MoF) will soon ask the microcredit regulatory authority (MRA) for issuing necessary directives to the NGOs to stop such business, which is contrary to the insurance act, they added.
According to the Insurance Act 2010, none can run insurance business having no license from the Insurance Development and Regulatory Authority (IDRA).
Officials said the MoF formed a committee last November to prepare a work plan for overall development of the insurance sector.
The committee identified, among others that various NGOs are indulging in micro insurance business alongside providing micro-credit.
It also found that these NGOs have never taken license from the insurance regulator to do such business.
Business of insurance companies is being affected as the NGOs have become involved in it, it was also found.
The committee said Section 24 of the Microcredit Regulatory Authority (MRA) Act allows the NGOs to provide insurance coverage to members of micro-credit receivers.
On the other hand, Section 8 (1) of the Insurance Act 2010 says none will be able to carry out insurance business under the act having no license from the authority.    
Contacted over telephone Thursday, IDRA chairman (current charge) Gokul Chand Das told the FE these micro-finance organisations can not do insurance business under the insurance law of the country.
"The MRA has been told that the NGOs cannot run insurance business," he said.
Mr Das said now the MRA has to take steps to stop such unauthorised business by the NGOs.
He said the MoF-formed committee had also recommended to stop business by microfinance organisations.
Secretary to the financial institutions divisions Eunusur Rahman told the FE Thursday a committee was formed to give a report on overall issues of insurance sector development.
"We are scrutinising the report. If insurance business by NGOs is found contradictory to the Insurance Act, we will definitely take measures to stop it," he said.
MRA executive vice chairman Amalendu Mukherjee could not be contacted despite several attempts.
At present some 690 NGOs and microfinance institutions are registered with the MRA.
 syful-islam@outlook.com