Insurance Development and Regulatory Authority (IDRA) has canceled the business operating licence of Standard Insurance for rule violations and involvement with irregularities.
It is the first time in the country that an insurance company lost its licence.
The decision came at the 86th board meeting of IDRA held yesterday at the authority’s headquarters.
“The authority took the final decision of canceling licence as per the Insurance Act 2010,” a senior executive of IDRA said, asking not to be named.
The rule says that the authority will cancel the licence immediately of insurer if its activities are not satisfactory, and if satisfactory, the suspension order will be withdrawn.
The notice of licence cancellation will be issued soon, he said.
IDRA will have to inform the insurance company about the licence cancellation order through issuing notice within 15 days of taking the decision, according to the rule.
The cancellation order will be effective from the date of issuing the notice.
The company can appeal against the cancellation order to the government within 90 days.
Earlier, the licence of Standard Insurance was suspended on June 17 for three months due to its non-compliance with the re-insurance provision and later suspension order was extended on September 13 for two more months.
The interim suspension was supposed to end on November 17.
IDRA found that the company, instead of taking corrective measures, continues its business during the suspension period and committed various irregularities, violating rules.
At last the authority held a hearing with the board of the company on Monday.
At the hearing, the board admitted it committed irregularities. In this perspective the authority cancelled the licence of the insurance as per the rule.
The company cannot make any new insurance contract after the cancellation of the licence, but the contracts made before the licence cancellation will continue.
An observation report prepared by the regulatory body over the activities of the insurance has mentioned that the company has continuously been breaching rules instead of taking corrective measures.
The company sent a re-insurance statement of April-June quarter to Sadharan Bima Corporation on August 13 around two months after the suspension.
“The fact that the company did not re-insure some policies which were re-insurable even after being punished,” mentioned the report.
Analysing the re-insurance statement of the year 2005 to 2014, IDRA found that the company did not comply with re-insurance provision in case of many policies.
Such tendency suggests that it has turned into a habitual fact for the company to violate rules, said the report.
The insurance concealed a lot of information about fire insurance in its 2013-14 statement. In many cases, the company showed less amount, hiding the real amount of insurance policies.
Standard Insurance is listed with Dhaka Stock Exchange and its share price was Tk15 yesterday.
The company was incorporated as a public limited company on November 3, 1999 under the Companies Act 1994. The paid up capital of the company is Tk2.29 crore.
The authority issued licence to 14 insurance companies under political consideration in the year 2013. Of them, two were general insurance and 12 life insurance companies.
Currently, a total of 75 insurance companies, including life and non-life, in the private sector are operating business.