Three new ordinances on insurance likely by next week

FE ReportbrThree new ordinances are set to come into force next week to strengthen the regulatory process of the insurance industry. brAfter making some amendments, all the three proposed ordinances have already been submitted to law ministry for vetting, official sources said.brThe drafts on the three laws -- The Insurance Ordinance 2008, The Independent Insurance Regulatory Authority Ordinance 2008 and Insurance Corporation (amendment) Ordinance 2008 -- got approval of the council of advisers in July.brAccording to a competent source, the commerce ministry has made six to seven corrections in the provisions, which include the size and appointment process of insurance companies' board of directors in line with the advice of the council of advisers.brBesides, the authorities have also made some amendments to the relevant provision, under which the proposed regulatory authority will enjoy more freedom in spending fund, the official said. brAfter vetting those amendments, the law ministry is expected to place the proposed ordinances before President Iajuddin Ahmed by early next week for his consent, he said. brIf everything goes well, gazette notifications on the proposed ordinances will come into effect by the middle of this month, the official said. brA senior commerce ministry official said the local insurance industry is now upbeat about the replacement of 70-year-old insurance laws through the ordinances that aim to modernise the sector.brPrepared by an eight-member experts committee, which was formed by the last BNP-led alliance government in 2004, the drafts of the insurance ordinances were submitted to the government in December 2006.brAlthough the commerce ministry placed the drafts before the council of advisers several months back, the ministry was asked to place those after scrutiny.brHowever, the council turned down another proposal on enactment of The 'Takaful' Ordinance for Islami insurance companies, officials noted. brOfficials, however, said the government had initiated a move to legislate new laws for streamlining the regulatory processes of the country's insurance business as the existing lawsrules are too old to serve the purpose.brAccording to the draft laws, the proposed Insurance Ordinance 2008 will replace the existing Insurance Act 1938 and the Insurance Rules 1958, they said.brSome 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 proposed ordinance, they added.brThe 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.brCurrently, 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.brThe proposed Independent Regulatory Authority Ordinance is to abolish the existing Department of Insurance, sources said.br