Standard Insurance continues its business even after the Insurance Development and Regulatory Authority suspended the company’s operating licence on June 17 for three months.
The suspension order was later extended on September 13 for two more months.
The insurance was restricted from new business during the suspension period, but its Agrabad and Khatungang branches in Chittagong issued new policy, violating rules during the interim suspension period of September and October.
The insurance which was punished for its failure to comply with mandatory re-insurance policies has been repeating the same offence in line with its insurance business.
Not only in case of re-insurance, the company has also been violating rules by doing business on credit and not storing office documents.
The board of the company attended a hearing held yesterday over its irregularities and rule violations.
At the hearing, the board admitted of issuing new policies during the ongoing licence suspension period. It also failed to satisfy the authority by giving explanations for other allegations.
The minutes of the meeting noted that IDRA will take the decision as per the Insurance Act 2010. 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immediately of insurer if its activities are not satisfactory, and if satisfactory, the suspension order will be withdrawn.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 authority observes that the company lacks efficiency in operating insurance business. Moreover, the board of directors did not care for the rules and regulations and even the instructions of IDRA.
They are doing the offence repeatedly, said a senior executive of IDRA.
Contacted, Amar Krishna Saha, CEO of Standard Insurance, admitted that they committed mistakes.
“It depends on IDRA about what decision it is going to take,” he said.
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 appeared 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 lesser amount, hiding the real amount of insurance policies.
The regulatory authority extended the licence suspension period as the company failed to take corrective measures about re-insurance which is mandatory for a non-life insurance company according to the Insurance Act 2010.
The interim suspension will end on November 17.
Non-compliance with re-insurance provision brought a negative impact on the company’s cash fund. The total liabilities of Standard Insurance stood at Tk86 crore against which investment was Tk71.79 crore including investors equity Tk45.29 crore as of year 2014.
If the investors equity is deducted, the investment stands at Tk26.50 crore which is not adequate to meet up the company’s liabilities, according to the IDRA report.
Standard Group came under the spotlight after a devastating fire at Standard Garments in Gazipur in 2013. Standard Insurance is a listed company in the stock market.
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.
