Rules on the anvil for non-life insurance cos

The finance ministry has held firm to the investment of non-life insurance companies' 30 per cent assets in government securities, officials said.
The move has been made to bring transparency and accountability in fund utilisation of the insurance companies, they added.
Currently, life insurance companies invest 30 per cent of their assets in government securities.
On the other hand, non-life insurers invest only Tk 25 million in the securities.
To this end, a recent ministerial meeting sought a detailed report from the Insurance Development and Regulatory Authority (IDRA) with recommendations.
It asked the IDRA to take into consideration the history of premium earnings, profits and investment trends of insurance companies.
Sources said finance division has suggested that the non-life insurers invest 30 per cent of their earnings in the government securities.
Subsequently, the financial institutions division (FID) of the ministry has supported the proposal.
According to officials, the division is now preparing the Asset Investment and Preservation Rules 2019 for insurance companies.
The FID seeks to incorporate in the rules a provision of investing 30 per cent assets of insurance companies in government securities.
However, the insurers have strongly opposed the move, saying non-life insurance companies would not be able to comply with the provision.
Bangladesh Insurance Association executive committee member Farzanah Chowdhury told the meeting that the business procedures of life and non-life insurers are totally different.
Non-life companies offer insurance coverage on a one-year basis while life insurance companies provide coverage for a long term, she argued.
For this reason, she said, non-life firms would not be able to invest their 30 per cent earnings in government securities for a long time.
Also chief executive officer (CEO) of Green Delta Insurance Company Ltd, Ms Chowdhury said the ratio for non-life firms can be raised gradually.
Asia Insurance Ltd CEO Imam Shaheen also said investing 30 per cent of non-life insurers' assets in the government securities is quite impossible.
"We can hardly invest 5.0 per cent of our assets in the government securities," he told the FE.
If 30 per cent is made mandatory, Mr Shaheen said, the companies would be in dire straits.
"The majority of our premium earnings is being spent as commission. Our annual income is paltry," he noted.
A senior finance division official told the FE that a final decision would be made on this issue once the IDRA submits the report to the ministry.
Stakeholders' interests would also be taken into consideration for the sake of the industry, he cited.

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