Now life insurers to save 15% in operating costs: Idra boss

The Insurance Development and Regulatory Authority (Idra) has reformed the supervisory level and commission structure to control the management cost of life insurance companies.

This will reduce the cost of life insurance firms by up to 15%, Idra Chairman Dr M Mosharraf Hossain said on Sunday.

He made the remarks at a meeting organised by the Insurance Reporters Forum (IRF) to discuss the problems and prospects of the country's insurance sector.

IRF General Secretary Sakhawat Hossain Sumon moderated the meeting with Golam Mowla, president of the organisation, in the chair.

"A life insurance firm spreads a kind of notoriety when it does not pay its insurance claims on time," said Mosharraf Hossain.

"That is why we have taken steps to strengthen the financial base of life insurers. A directive has been issued in this regard. It will be effective from 1 September this year."

As per the new notification, at the supervisory level of the life insurance company, officers can be appointed in a maximum of three grades, which were the five grades before.

He said according to the law, sponsors, and directors of insurance companies have to hold 60% shares.

"We have already given instructions in this regard. We are strictly monitoring it. There are some complications with listed companies. But, the law must be obeyed," he added.

The IDRA chairman said 45 auditors have been appointed to monitor the activities of general insurance companies. In this case, the audit activities of general insurance companies have not been stopped.

Mosharraf Hossain also highlighted some problems, including the manpower crisis, in the insurance sector.

Insurance companies have about two crore customers and a massive population is involved in this sector. But, its regulatory body IDRA is being run with only 31-strong manpower.

Experts have been saying for a long time that Bangladesh is one of the most untapped insurance markets in terms of penetration rate.

Awareness and a strong culture of insurance service behind economic activities can help the industry thrive.

According to the Swiss Re Group, a leading global reinsurer, the overall insurance penetration in Bangladesh stood at a meagre 0.49% in 2019 – the lowest among emerging Asian countries.

In 2020, the total investment in the life insurance sector stood at Tk36.54 crore, which is 6.57% higher than the previous year.

During the year, the premium collection of life insurance stood at Tk9455 crore, which was 1.5% lower than the previous year.