31 insurance companies to enter capital market in three months, he says
Finance Minister AHM Mustafa Kamal said on Sunday that insurance would be made compulsory for flats, residential buildings, corporate offices, commercial buildings and structures, crops and livestock in phases.
The minister said the insurance companies were directed to introduce new diversified products to minimize risks for citizen and their property.
He stated that the insurance sector had a tremendous role to play for the benefit of the economy and that a decision was made to bring 31 insurance companies into the capital market within the next three months.
He observed that capital market was a fundamental area of economy and insurance companies must go to the market to help overcome the current crisis.
"Our plan is to make insurance compulsory for flats/apartments, in which we live. Even offices, where we work every day, need to be covered by insurance," Kamal told a news briefing at the planning ministry at Agargaon in the capital.
The briefing was held after finance minister's meeting with chairmen and managing directors and chief executive officers (CEOs) of both life and non-life insurance companies of the country.
"Office buildings where we have to go regularly need to be insured. We now travel to office by cars, which are not fully covered by insurance. Car parking places are also not insured. If we want to strengthen our economy, every component of economy must be insured. Every building, small or big, must have hundred percent insurance coverage," he stressed.
In reply to questions, the finance minister said insurance would be introduced for marginalized people, livestock and crops.
"In many countries, even dogs and cats are insured, let alone human and property," he claimed.
The finance minister said the government would issue directives to relevant authorities to introduce insurance for safety of owners of flats, residential and office buildings, car users, crops and livestock with affordable premium payment.
"We will issue directive soon. Premium payment for the insurance shall be competitive so that everyone can afford these," he said.
Supplementing the minister, Insurance Development and Regulatory Authority (IDRA) Chairman Shafiqur Rahman Patwari said 31 insurance companies out of total 78 were listed with the capital market till date.
In the country, there are 32 life insurers and 46 non-life insurers in operation, according to IDRA statistics.
The finance minister said the insurance companies were given licences on the pre-condition that they would go to the capital market within three years of launching their operation, which many of the insurance companies failed to comply.
"Very unfortunately, many of the insurance companies have not complied to the pre-condition. I urge those companies to initiate the due procedure to enter the capital market by the next three months. Within the timeline, they all must go to the capital market. They must comply to the rules."
"If any of the companies failed to be compliant, their licences will be suspended as first step of penalty. If they are not rectified, their licences will be cancelled leading to closure of business. We will apply legal procedures to implement that," he warned.
"As a second option, companies which will fail to be compliant may be merged with others," he maintained.
The finance minister said the government reserved the authority to initiate actions if the objective with which insurance companies were allowed to do business remained unmet.
"I wish all of them will comply for the sake of our economy. At least they can start the process within the three months. That decision has been made today; they must start," the minister reiterated.
The finance minister said the insurance companies joining the capital market would help boost the trade and add tremendous value to the country's economy.
He said the insurance sector suffered long from negative impression due to various propaganda.
"But days have changed; and we should think how we all can reap its benefit," he stated, adding that the sector turned around overcoming the trust deficiency and improving the impression among clients by good performance over the past few years.
He said: "Bangladesh Insurance Association (BIA) chairman informed me that they have been thinking of further improvement in building trust among people about insurance in the days to come by introducing new products."
During his speech, the finance minister asked IDRA chairman and insurers to go abroad to see how they ensured insurance for all.
On commission for insurance scheme sellers
In the meeting, a decision was also made to stop unethical practices by some of the insurers, which offer limitless money, which ultimately harm the business. The meeting observed that managements of some insurers often offered salesperson a commission up to above 70%, which was extremely unethical, the finance minister added.
"Therefore, a decision has been made to spend maximum 15% of premium income for the commission purpose. Every insurance company has been asked to comply with this decision with immediate effect," he said.
Basic data base for clients
The finance minister said developing a basic digital database was underway for clients with names and policy numbers, which would enable a client to see him or herself to see the latest status of his or her scheme.
"It will develop trust of clients," he said.
Introducing scholarship for insurance/actuary study
The finance minister also asked insurance companies to work under public private partnership initiative to develop human capital for the sector by introducing scholarships, new subject on insurance studies at different universities.
He said starting actuary study might be the highest priority.
"If we can successfully bring out 100/200 graduates in this subject, they will be helpful for the sector's perfect functionality," he noted.
March 1 National Insurance Day
The finance minister said the Sunday's meeting anonymously decided to celebrate March 1 of every calendar year as National Insurance Day in the country from next year.
Chairmen and MDs and CEOs of all the insurance companies joined the meeting. Among others, Md Ashadul Islam, Senior Secretary of Financial Institutions Division, Ministry of Finance, Sheikh Kabir Hossain, President, Bangladesh Insurance Association, and Chairman, Sonar Bangla Insurance Limited, BM Yousuf Ali, President, Bangladesh Insurance Forum, CEO of Popular Life Insurance Co Ltd, were present.
Some 31 insurance companies now need to be compliant to fulfill the licensing precondition of getting enlisted with the capital market.
Of them the life insurers are Alpha Islami Life Insurance, Baira Life Insurance, Best Life Insurance, Chartered Life Insurance, Daimond Life Insurance, Golden Life Insurance, Guardian Life Insurance, Homeland Life Insurance, Jamuna Life Insurance, Jibon Bima Corporation, LIC Bangladesh, Meghna Life Insurance, Mercentile Life Insurance, Metlife (American Life Insurance Company), NRB Global Life Insurance Co Ltd, Protective Islami Life Insurance, Sawdesh Life Insurance, Sonali Life Insurance, Sunflower Life Insurance, Trust Islami Life Insurance, Zenith Islami Life Insurance.
The non-life insurers are Bangladesh Co-operative Insurance Limited, Crystal Insurance Company Limited, Desh General Insurance Company Limited, Express Insurance Limited, Islami Commercial Insurance Company Limited, Sadharan Bima Corporation, Sena Kalyan Insurance Company Limited, Sikder Insurance Company Limited, South Asia Insurance Company Limited, Union Insurance Company Limited.