|
The Chief Controller of Insurance (CCI) has initiated some strict measures to check arbitrary payments of commission by general insurance companies to their policy agents.
The move aims at reducing the ever-growing overhead expenditure of the insurance companies.
Under the initiative, formation of several inspection committees to oversee the commission payments by insurers is on the cards, official sources said.
The main task of the committees will be to see whether or not the general insurance companies pay commission beyond the permissible rates to their policy agents.
If any arbitrary payment is detected, the committees will report it to the regulator for next course of action, said an official.
He further said such committees would comprise officials from the CCI/ Department of Insurance and representatives of the Bangladesh Insurance Association.
Formation of such committees has been initiated against the backdrop of the reintroduction of commission payment system for general insurance business by the authorities recently, according to officials.
Earlier, the government withdrew the official restriction on payment of commission for agents of general insurers after it found that such bar was merely effective, official sources said.
Officials, however, acknowledged that even after the discontinuation of the commission payment system in March 2002, operating costs of most of the general insurance companies continued to rise.
"The authorities found themselves in a difficult situation to detect such hidden payments in the form of commission even after the imposition of such restriction," said an official.
Arbitrary payment of such commission also caused an unhealthy competition in the insurance business.
Taking the previous experience into account, the authorities are bent upon forming the committees to oversee such unethical practices by insurers, officials noted.
Apart from the proposed committees, a major enhancement of financial penalty against additional expenses of insurance companies is also underway said.
Officials indicated that the experts' committee on preparation of the draft insurance acts has already recommended a significant increase in the amount of such penalty.
Under the current provision, the authorities can charge fine worth Tk 50,000 to Tk 100,000 on an individual company, which is inadequate to serve the purpose, officials observed.
Responding to a query, a senior official of the Chief Controller of Insurance (CCI) told the FE that almost all the 43 general insurance companies often pay the existing fine against their increased expenditures.
Meanwhile, the government in the fiscal budget for 2005-06 has also imposed tax on additional expenditures of the insurers to help curb the operational cost of insurance companies.
Officials, however, said such a combined policy measures would definitely restrict the existing unofficial payments of commission by insurers.
|