Insurers likely to get 3 years to raise paid up capital
Thursday, 21 April 2011
Asaduzzaman Pallab
The country's insurance companies are likely to get a period of three years to raise their minimum paid up capital in accordance with the newly-enacted Insurance Law 2010, sources in the ministry concerned said. The Insurance Law made it mandatory for the general insurance companies to increase their minimum paid up capital to Tk 400 million and the life insurance companies Tk 300 million each. Most of the general insurance companies listed on the country's bourses have a paid up capital of Tk 150 million each. The amount is Tk 75 million in case of the life insurance companies. Recently, the Insurance Development Regulatory Authority (IDRA) has placed their recommendations on the insurance sector to the Ministry of Finance. There the IDRA has proposed to increase the paid up capital of the insurers within the next three years. The IDRA has also proposed to make the maintenance of solvency limit mandatory for the insurance companies for the first time. The insurance regulator submitted their recommendations on the basis of the suggestions of a seven-member expert committee on the rules and regulations for the insurance sector. The rules and regulations will determine how the newly-enacted Insurance law would be enforced. The expert committee worked under a project, headed by Jiban Bima Corporation Chairman Dr Mohammad Shohrab Uddin. Sources said among other issues, the IDRA has suggested the areas of investment for the life insurance companies. For the first time, the authority fixed up investment criteria for the general insurance and Islami Shariah-based (Takaful) insurance companies. The IDRA has also suggested the maximum commission ceiling in the case of a single business and the maximum management expenses ceiling. IDRA Chairman Actuary Shefaque Ahmed told the FE that ensuring more protection for the general policy-holders was the prime objective behind the formulation of new rules and regulations for the insurance sector. "The insurance companies will have to maintain the minimum paid up capital or the solvency margin limit, whichever is higher, to protect the interest of the policy-holders," he added. However, Bangladesh Insurance Association (BIA) President Sheikh Kabir Ahmed told the FE that giving three years' time limit to augment the paid up capital of the insurance companies has not been finalised yet. The ministry will take decision on the issue after holding discussions with the stakeholders of the insurance sector, he also said. "The government will be rather harsh on the insurance companies, if the latter are asked to raise their minimum paid up capital within the next three years," he added.
The country's insurance companies are likely to get a period of three years to raise their minimum paid up capital in accordance with the newly-enacted Insurance Law 2010, sources in the ministry concerned said. The Insurance Law made it mandatory for the general insurance companies to increase their minimum paid up capital to Tk 400 million and the life insurance companies Tk 300 million each. Most of the general insurance companies listed on the country's bourses have a paid up capital of Tk 150 million each. The amount is Tk 75 million in case of the life insurance companies. Recently, the Insurance Development Regulatory Authority (IDRA) has placed their recommendations on the insurance sector to the Ministry of Finance. There the IDRA has proposed to increase the paid up capital of the insurers within the next three years. The IDRA has also proposed to make the maintenance of solvency limit mandatory for the insurance companies for the first time. The insurance regulator submitted their recommendations on the basis of the suggestions of a seven-member expert committee on the rules and regulations for the insurance sector. The rules and regulations will determine how the newly-enacted Insurance law would be enforced. The expert committee worked under a project, headed by Jiban Bima Corporation Chairman Dr Mohammad Shohrab Uddin. Sources said among other issues, the IDRA has suggested the areas of investment for the life insurance companies. For the first time, the authority fixed up investment criteria for the general insurance and Islami Shariah-based (Takaful) insurance companies. The IDRA has also suggested the maximum commission ceiling in the case of a single business and the maximum management expenses ceiling. IDRA Chairman Actuary Shefaque Ahmed told the FE that ensuring more protection for the general policy-holders was the prime objective behind the formulation of new rules and regulations for the insurance sector. "The insurance companies will have to maintain the minimum paid up capital or the solvency margin limit, whichever is higher, to protect the interest of the policy-holders," he added. However, Bangladesh Insurance Association (BIA) President Sheikh Kabir Ahmed told the FE that giving three years' time limit to augment the paid up capital of the insurance companies has not been finalised yet. The ministry will take decision on the issue after holding discussions with the stakeholders of the insurance sector, he also said. "The government will be rather harsh on the insurance companies, if the latter are asked to raise their minimum paid up capital within the next three years," he added.