|
The Bangladesh Insurance Association (BIA), the apex body of the country's 60 private insurance companies, has reiterated its demand for making compulsory placement of 50 per cent reinsurance by the private general insurance companies with state-owned Sadharan Bima Corporation (SBC) voluntary.
"There is hardly anybody in the SBC who can satisfactorily handle reinsurance business with the member companies. As a result, we have been experiencing great difficulty in dealing with the state-owned body," BIA chairman M Shamsul Alam said in a letter sent to the commerce secretary March 2.
At present, in compliance with the Insurance Corporations Act, 1973, it is compulsory for the general insurance companies to reinsure 50 per cent of their surplus liability/risks with the SBC and the remaining 50 per cent has been made voluntary as it can be made within the country.
Only three private companies -- Green Delta, Progati and Karnaphuli -- do their 50 per cent reinsurance with foreign companies.
"If allowed, we won't go to the SBC where most of the knowledgeable officers have either left or retired from the government office leaving a great vacuum therein," one managing director of a leading private insurance company told this correspondent Saturday.
He said the situation has further aggravated with the departure of a managing director (MD) having profound professional knowledge about one year back and, since then, no professionally qualified MD has been appointed in the SBC.
Market sources said Akhtar Ahmed, a professionally qualified MD, resigned from the top post of SBC about one year back.
SBC men are making inordinate delay in according approval of settlement of claims and also in payment of cash losses resulting in procrastination in settlement of claims by the insurance companies to their clients, market sources alleged.
"In fact, SBC is neither properly functioning nor can they render services as a professional reinsurer," a BIA source regretted.
Market sources said fierce competition from private insurers coupled with growing inefficiency and corruption has already affected the businesses of SBC.
Sources said the asset of SBC is Tk 15 billion. SBC earns 80 per cent of its income as it is the reinsurer of country's 43 private general insurance companies.
Market operators attributed the loss to fierce competition from the private insurers. Insiders blamed inept business attitude, corruption, lack of qualified professionals and huge overhead cost for the gradually declining trend in the SBC's annual business.
"In the context of the present-day open market policy, we strongly feel that compulsory placement of 50 per cent reinsurance with SBC by the general insurance companies should be made voluntary and make the entire 100 per cent reinsurance placement voluntary either at home or abroad by amending the provisions of the insurance act," said the immediate past chairman of BIA Nasir A Choudhury.
He further said, nowhere in the world, a reinsurer company competes with another insurance company as terms and conditions always go in favour of the reinsurer company.
"It gives a whopping advantage to the SBC when other private companies compulsorily come to the state-owned office on the reinsurance matter," Choudhury pointed out.
Brushing aside a common argument advanced by the SBC men opposing the curtailment of current mandatory system on reinsurance, Choudhury said if state-owned Jibon Bima Corporation could survive without any similar system, SBC could also because of its direct compulsory insurance business with the public sector corporations and bodies.
Mentionably, reinsurance placements for life insurance companies were made voluntary by amending the provision where 50 per cent reinsurance was mandatory.
|