Ordinances in offing to discipline insurance sector
Saturday, 16 June 2007
S M Jahangir
The Ministry of Commerce will soon place three separate draft ordinances on the country's insurance sector before the council of advisers for approval.
"We are submitting three draft ordinances to the advisers' council for getting its nod," a senior commerce ministry official told the FE.
The draft ordinances to be titled as Insurance Ordinance 2007, Independent Insurance Regulatory Authority Ordinance 2007 and 'Takaful' Ordinance 2007 for Islami insurance companies.
Although the previous government had taken initiative to adopt three separate bills to this effect through parliament, it could not be possible due to no-completion of necessary ground works and other formalities.
Since the country is now under a state of emergency, the caretaker administration has taken steps to enact the said laws through ordinances, sources said.
Official sources said adviser in charge of the Ministry of Commerce AB Mirza Md. Azizul Islam has already approved the three proposed drafts ordinances that will be placed before the council of advisers.
They further said the drafts might require the law ministry's vetting before submitting those to the council of advisers.
The previous government initiated legislation of the three new acts, aiming to streamline the regulatory processes of the country's insurance business, they said, adding the existing laws/rules are too old to serve the purpose.
"The main purpose of enacting the laws is aimed at making the country's insurance sector vibrant and operationally sound," said the official concerned.
Under the initiative, an eight-member experts' committee, which was formed in early 2005 by the government, had submitted three separate draft laws on insurance sector in December 26 of the same year. sources said.
The committee, headed by the then Chief Controller of Insurance, proposed three draft acts namely Independent Insurance Regulatory Authority Act -2005, the Insurance Act 2005 and Takaful Act 2005.
Officials said the all the three proposed ordinances would be almost similar to those of the insurance laws, as suggested by the expert committee.
According to the present proposals, the proposed Insurance Ordinance 2007 will replace the existing Insurance Act 1938 and the Insurance Rules 1958, they hinted.
Some new provisions, including establishment of a policyholders' protection fund, enhancement of companies' capital base, creation of brokerage houses for insurance policies and requirement of minimum solvency margin, have been included in the draft Insurance Ordinance 2005, officials said.
The new insurance ordinance also aims to bring all the insurance companies -- both in the private and public sectors -- under a uniform regulatory framework, sources said.
Currently, the Chief Controller of Insurance regulates the private insurance companies while the state-owned Sadharan Bima Corporations (JBC) and Jiban Bima Corporation (JBC) are regulated under the Insurance Corporation Act 1973, sources said.
The proposed Independent Regulatory Authority as proposed in one of the ordinances will replace the existing Department of Insurance, sources said.
Besides, the draft Takaful Ordinance 2005 has been proposed for facilitating operations of the country's emerging Islamic insurance business.
The Ministry of Commerce will soon place three separate draft ordinances on the country's insurance sector before the council of advisers for approval.
"We are submitting three draft ordinances to the advisers' council for getting its nod," a senior commerce ministry official told the FE.
The draft ordinances to be titled as Insurance Ordinance 2007, Independent Insurance Regulatory Authority Ordinance 2007 and 'Takaful' Ordinance 2007 for Islami insurance companies.
Although the previous government had taken initiative to adopt three separate bills to this effect through parliament, it could not be possible due to no-completion of necessary ground works and other formalities.
Since the country is now under a state of emergency, the caretaker administration has taken steps to enact the said laws through ordinances, sources said.
Official sources said adviser in charge of the Ministry of Commerce AB Mirza Md. Azizul Islam has already approved the three proposed drafts ordinances that will be placed before the council of advisers.
They further said the drafts might require the law ministry's vetting before submitting those to the council of advisers.
The previous government initiated legislation of the three new acts, aiming to streamline the regulatory processes of the country's insurance business, they said, adding the existing laws/rules are too old to serve the purpose.
"The main purpose of enacting the laws is aimed at making the country's insurance sector vibrant and operationally sound," said the official concerned.
Under the initiative, an eight-member experts' committee, which was formed in early 2005 by the government, had submitted three separate draft laws on insurance sector in December 26 of the same year. sources said.
The committee, headed by the then Chief Controller of Insurance, proposed three draft acts namely Independent Insurance Regulatory Authority Act -2005, the Insurance Act 2005 and Takaful Act 2005.
Officials said the all the three proposed ordinances would be almost similar to those of the insurance laws, as suggested by the expert committee.
According to the present proposals, the proposed Insurance Ordinance 2007 will replace the existing Insurance Act 1938 and the Insurance Rules 1958, they hinted.
Some new provisions, including establishment of a policyholders' protection fund, enhancement of companies' capital base, creation of brokerage houses for insurance policies and requirement of minimum solvency margin, have been included in the draft Insurance Ordinance 2005, officials said.
The new insurance ordinance also aims to bring all the insurance companies -- both in the private and public sectors -- under a uniform regulatory framework, sources said.
Currently, the Chief Controller of Insurance regulates the private insurance companies while the state-owned Sadharan Bima Corporations (JBC) and Jiban Bima Corporation (JBC) are regulated under the Insurance Corporation Act 1973, sources said.
The proposed Independent Regulatory Authority as proposed in one of the ordinances will replace the existing Department of Insurance, sources said.
Besides, the draft Takaful Ordinance 2005 has been proposed for facilitating operations of the country's emerging Islamic insurance business.