Govt treads tough line as Tk 4.45b reinsurance claims lie unsettled
S M Jahangir | Monday, 2 June 2008
The government has gone tough on settlement of reinsurance claims involving nearly Tk 4.45 billion (445 crore) that the state-owned Sadharan Bima Corporation (SBC) is liable to pay to other private insurers.
The Ministry of Commerce has set a September 30 deadline for the SBC to settle the pending reinsurance claims of its clients, officials said Sunday.
'The SBC has been asked to settle all the pending reinsurance claims of the private general insurance companies by the deadline,' a senior official told the FE.
Referring to the official figures, the official mentioned that the SBC received a total of 366 reinsurance claims from its partner insurance companies until March, 2008.
By the deadline, the SBC has to settle at least 120 reinsurance claims a month.
An official said, 'Non-payment of reinsurance claims has prompted the commerce ministry to intervene in the claim settlement process.'
He, however, said the commerce adviser has already discussed the claim settlement arrangements with senior officials of the SBC and the Department of Insurance.
The commerce ministry has stepped in to streamline the settlement process of reinsurance claims, officials said, adding that the commerce ministry's current steps followed repeated appeals from the relevant general insurers.
They further said the concerned general insurance companies are facing immense financial problems in running their business smoothly due to non-settlement of the reinsurance claims by the SBC.
Apart from the move on reinsurance claims, the authorities have also taken necessary steps to ensure that the SBC pay insurance claims to its own policyholders accordingly, said an official.
Presently, the SBC requires to settle insurance claims of its policyholders involving more than Tk 4.0 billion.
The SBC is doing direct insurance business side by side with reinsurance of private insurance companies.
After establishment of private insurance companies in 1985 in Bangladesh, the government authorised SBC to provide 100 per cent reinsurance coverage to private insurance companies.
But the Insurance Corporation (Amendment) Act 1990 provides for placement of fifty per cent of a company's reinsurance with the SBC and the remaining fifty per cent may be reinsured either with SBC or with any other insurer in Bangladesh or abroad.
As the largest non-life insurance underwriter in Bangladesh in terms of gross premium, network of offices and trained manpower, the SBC is also entitled to provide 50 per cent insurance coverage to public sector business in Bangladesh.
However, the premium income of the lone state-run SBC has been estimated at Tk 4.90 billion for the 2007 calendar year while the earning was Tk 4.41 billion in 2006.
The figures were disclosed Sunday at a meeting of Commerce Adviser Hossain Zillur Rahamn with the members of board of directors of the Corporation. Commerce Secretary Firoz Ahmed and SBC Chairman M Shamsul Alam, among other senior officials of the SBC, were present at the meeting held at the Corporation, said a press release.
Stressing the need for enhancing the service and rapid growth of the local insurance sector, the adviser also urged the concerned authorities to maintain transparency and accountability while discharing their duties.
The meeting was informed that a total of 625 claims involving Tk 1.12 billion were settled in 2007 as against 1,079 claims worth Tk 5.02 billion.
Besides, the SBC paid Tk 1.76 billion against a total of 5,174 insurance claims made by private companies during the period between 2005 and 2007, the press release added.
The Ministry of Commerce has set a September 30 deadline for the SBC to settle the pending reinsurance claims of its clients, officials said Sunday.
'The SBC has been asked to settle all the pending reinsurance claims of the private general insurance companies by the deadline,' a senior official told the FE.
Referring to the official figures, the official mentioned that the SBC received a total of 366 reinsurance claims from its partner insurance companies until March, 2008.
By the deadline, the SBC has to settle at least 120 reinsurance claims a month.
An official said, 'Non-payment of reinsurance claims has prompted the commerce ministry to intervene in the claim settlement process.'
He, however, said the commerce adviser has already discussed the claim settlement arrangements with senior officials of the SBC and the Department of Insurance.
The commerce ministry has stepped in to streamline the settlement process of reinsurance claims, officials said, adding that the commerce ministry's current steps followed repeated appeals from the relevant general insurers.
They further said the concerned general insurance companies are facing immense financial problems in running their business smoothly due to non-settlement of the reinsurance claims by the SBC.
Apart from the move on reinsurance claims, the authorities have also taken necessary steps to ensure that the SBC pay insurance claims to its own policyholders accordingly, said an official.
Presently, the SBC requires to settle insurance claims of its policyholders involving more than Tk 4.0 billion.
The SBC is doing direct insurance business side by side with reinsurance of private insurance companies.
After establishment of private insurance companies in 1985 in Bangladesh, the government authorised SBC to provide 100 per cent reinsurance coverage to private insurance companies.
But the Insurance Corporation (Amendment) Act 1990 provides for placement of fifty per cent of a company's reinsurance with the SBC and the remaining fifty per cent may be reinsured either with SBC or with any other insurer in Bangladesh or abroad.
As the largest non-life insurance underwriter in Bangladesh in terms of gross premium, network of offices and trained manpower, the SBC is also entitled to provide 50 per cent insurance coverage to public sector business in Bangladesh.
However, the premium income of the lone state-run SBC has been estimated at Tk 4.90 billion for the 2007 calendar year while the earning was Tk 4.41 billion in 2006.
The figures were disclosed Sunday at a meeting of Commerce Adviser Hossain Zillur Rahamn with the members of board of directors of the Corporation. Commerce Secretary Firoz Ahmed and SBC Chairman M Shamsul Alam, among other senior officials of the SBC, were present at the meeting held at the Corporation, said a press release.
Stressing the need for enhancing the service and rapid growth of the local insurance sector, the adviser also urged the concerned authorities to maintain transparency and accountability while discharing their duties.
The meeting was informed that a total of 625 claims involving Tk 1.12 billion were settled in 2007 as against 1,079 claims worth Tk 5.02 billion.
Besides, the SBC paid Tk 1.76 billion against a total of 5,174 insurance claims made by private companies during the period between 2005 and 2007, the press release added.