JS body to delve deep into dodging of insurance claims

Allegations of dodging settlement of insurance claims and payment of tax are likely to come under a close scrutiny by a parliamentary body as it sits today (Wednesday)for a remedy.
The Parliamentary Standing Committee on the Ministry of Finance (MoF) has put the insurance issue at the top of the agenda of its today's meeting to be held at the parliament house.
Senior members of the committee said the matter came up on the top slot as there are many allegations of non-payment or delay in settling insurance claims by both life and non-life insurance companies.
They said many insurers do not settle insurance claims timely, even in case of maturity, on variegated grounds -- some of them are genuine and some are not.
Many claims have remained unsettled for years, they noted -- also mentioning the cases of VAT evasion.
The standing committee will discuss in detail other irregularities, too, in the country's 77 life-and non-life insurance firms.
"Complaints about non-settlement of claims by the insurance companies are often lodged with us by the policyholders, and for this reason we took it as a serious issue of discussion," Dr Abdur Razzaque, chairman of the parliamentary standing committee on the MoF told the FE Tuesday.
Dr Razzaque, who earlier had served as food minister, said, "There are many insurers in the country and there are too many allegations as well when it comes to claim settlement."
Also a renowned agriculture expert, he said the watchdog wants to discuss the issue in detail with all stakeholders in the meeting meant for finding solutions to such problems in the industry to make the industry a vibrant one.
A source at the IDRA (Insurance Development and Regulatory Authority) said a claim of Tk 100,000 by a policyholder was recently settled after intervention by the law minister.
Such widespread allegations over claims take place in the rural areas where limited-income people take micro-insurances--a product with tiny premium to cover future risks.
In case of health insurance, the insurance firms do not pay the due amount of money despite the submission of authentic bills.
In case of non-life insurances there are allegations of delays and pending cases of non-settlement of claims by the insurance firms.
Sources at the IDRA said insurance firms often fail to keep their commitments made before selling their products.
"Suppose, an insurance firm pledged to pay Tk 1.5 million for a particular life product at maturity, but it offers Tk 1.2 million," said an IDRA official to explain the evasive acts.
He also said there is a life product named 3-payment insurance, which is a source of frequent disputes between the insurers and the policyholders.
IDRA sources said they had received many allegations on such types of products.
They also said field-level officers of the insurance companies often misguide the potential policyholders to sell their products. The policy holders feel cheated when they come to know about the actual offers made under the policies.
There is a provision to inform the authority about any complaints made by the policyholders in relation to non-settlement of claims.
But only one life insurer complies with that rule.
However, IDRA Chairman M Shefaque Ahmed told the FE that the authority has formed a committee to settle the claims and other disputes involving the insurance industry.
The IDRA has formed a dispute-resolution committee under section-73 of the Insurance Act 2010. And this four-member committee will sit whenever it gets complaints.
The policyholder concerned will have to pay 2.0 per cent of the settled claim to the committee.  
Dr. Razzaque said the standing committee might also form a sub-committee to look into the matter.
 "We want to delve deep into the issue and want to find appropriate solutions," he said.
He said there are many allegations of evading value-added tax (VAT) on the premium earnings.
 "We also want to stop it (VAT dodging) as the government exchequer is losing substantial amounts of revenues," Dr. Razzaque said.
Another report adds: The meeting will also review the country's tax-revenue collection growth scenario and potentialities.
The Jatiya Sangsad (JS) body will scrutinise implementation of its earlier recommendations regarding boosting internal revenue.
It is set to review the National Board of Revenue's (NBR) steps taken so far for expanding tax-base by netting potential taxpayers in district and upazilla level.
The revenue board is going to submit a comprehensive presentation on its steps and work-plan before the committee.
The NBR is set to place a report of its high-powered taskforce on increasing the country's tax-GDP ratio by 4.0 percentage points by the next four years.
A senior tax official said the revenue board will place the report with its recommendations on increasing tax-GDP ratio that witnessed a steady growth in the fiscal year 2013-14.
The NBR will also unveil its plan on checking capital flight from the country, he said.
In its previous meeting, the JS body recommended opening tax offices in different foreign missions or embassies to scrutinise income, bank balance, purchase of house and businesses of duel citizens.
It also asked to identify the people who have owned second home in different countries, including Malaysia, Singapore, Canada and the UAE, and examine their involvement in money laundering and terrorist financing for taking punitive measures.
The tax official said they are going to place an action plan on thwarting money laundering by opening tax wings in foreign missions. The NBR is set to suggest a feasibility study for opening the wings.
They said many other countries, including neighbouring India, have such tax wings in different missions to monitor their citizens' investment abroad.
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