The insurance regulator has warned the state-run agency SBC against non-compliance with the related provisions in realisation of outstanding re-insurance premiums to the tune of Tk 4.0 billion (400 crore), sources have said.
The regulator has also directed the Sadharan Bima Corporation (SBC) to collect the premiums by the end of this month.
The state-run corporation has also been asked to provide details about premium arrears the country's insurance companies owe to the SBC for the period from 2000 to 2011, according to the sources.
The Insurance Development and Regulatory Authority (IDRA) sent a letter to the SBC in this connection on Monday last.
The SBC had long been defying some mandatory rules of the regulator. The state-run corporation was not complying with the related provision in realisation of re-insurance premiums, sources said. The companies failing to abide by the related law and rules of the IDRA would be penalised, the sources said.
As per Section 9 (3) of the Insurance Act 2010, one of the main conditions the insurance companies is set during issuance of licences for them is they will meet the re-insurance requirements including collection of premium in time.
If any insurance company does not comply with the re-insurance requirements properly, the licence of the company will be put on hold or cancelled as per Section 10 (ja) of the Insurance Act.
A large number of insurers owed Tk 3.89 billion (389 crore) to the SBC until January last, according to the IDRA data.
An insurer is supposed to send a detailed account to the regulator within 45 days after every quarter and all transactions are needed to be completed in another 30 days since the date of submission of the detailed account. So transactions of the last quarter of 2014 were supposed to be completed by March 15 last. But the SBC did not collect the pending re-insurance premiums until April 14 last.
On the other hand, many insurers of the country owed about Tk 1.73 billion in arrears to the SBC as of January 01, 2012. The figures as of January 1, 2013 and January 1, 2014 stood at Tk 2.28 billion and Tk 2.96 billion respectively.
The SBC failure to realise the arrears was hampering the discipline and growth of the county's insurance sector. The insurance companies were making significant profits year after year without paying their premium arrears, according to the IDRA.
M Shefaque Ahmed, Chairman of the IDRA, could not be reached over phone for comment in this connection.
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