Auditors key to fighting fraud in ins sector

Experts at a webinar said that if auditors play their due role in auditing insurance companies, irregularities and fraudulent activities will be checked and good governance will be established in the sector.

They said the insurance sector has been neglected for so many years and that is why the country has less than one per cent insurance penetration in terms of the size of the country's population.

The sector is replete with so many irregularities, corruption and malpractices that the regulator alone can't overhaul the industry; everyone should play their part in righting the sector's wrongs, they said.

The Institute of Chartered Accountants of Bangladesh (ICAB) organised the webinar on 'Role of Auditors in ensuring good governance in Insurance Industry' on Saturday.

Speaking at the programme, Senior Secretary at Financial Institutions Division Ashadul Islam said if auditors play their role with due diligence, good governance will be established in the insurance sector.

Terming various irregularities and malpractices in the insurance sector as "creative", he said had they invested this creativity in the expansion of the market, the insurance sector would have been much better now.

He urged the insurance companies to come up with creative and diversified products at affordable premiums to expand the market.

Presenting a keynote paper, acting chairman of Insurance Development and Regulatory Authority of Bangladesh (IDRA) Dr. M. Mosharraf Hossain said the causes of weaker position of insurance sector in the society is due to image crisis and lack of good governance.

He said the key reason why the society doesn't have confidence in insurance sector is delayed payments of claims.

And the reason for delayed claims payments is poor ability of insurance companies, which is happening because management expenses are so high but investment yield low, he said.

He termed auditors "quasi regulator" and said if auditors give "true and fair" view of the operation of a company the regulator would be able to take corrective measures.

He said insurance companies are committing malpractices in so many innovative ways, including bulk printing, appointing ghost employees, purchasing vehicles or land at higher prices, spending on expensive offices and making fake bills and claims.

Expressing his frustration, he said, the regulator with only 50 men cannot check all of these malpractices, if auditors do not help it.

Bangladesh Insurance Association Chairman Sheikh Kabir Hossain alleged the auditors are teaching malpractices while they are supposed to catch it.

"I am sorry to say that auditors are teaching malpractices," he said.

He said if auditors audit by the book, there will be no malpractice in the insurance sector.

He also said that auditors should make no unethical and illegal request during audit.

ICAB president Muhammad Farooq FCA delivered welcome speech while Director at the Board of Directors of Bangladesh Bank (central bank of Bangladesh) AKM Aftabul Islam moderated the discussion.

Sabbir Ahmed FCA, Vice President of ICAB, gave vote of thanks at the programme.

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