Coverage of defence purchases by Sena Insurance opposed by public, private peers

Stakeholders have strongly opposed a plea by Sena Kalyan Sangstha (SKS) to allow its concern, Sena Insurance, to underwrite insurance risks relating to defence purchases, terming the move a violation of the Insurance Corporation Act.

They said the Act entitles only the state-run Sadharan Bima Corporation (SBC) to underwrite risks of public assets. Sena Insurance, by contrast, is not a state-owned enterprise but a concern of SKS, a charitable trust run by the Bangladesh Armed Forces.

Since Sena Insurance is not a state-run insurer, they argued, allowing it to underwrite risks of public assets would clearly violate the Act and deprive other private-sector insurers.

Officials said the Financial Institutions Division under the Ministry of Finance recently asked the Insurance Development and Regulatory Authority (IDRA) to seek stakeholders' opinion on whether Sena Insurance could be permitted to take on the task.

IDRA then held a stakeholders' consultation, where both public and private insurers strongly opposed the proposal, according to officials concerned.

At the meeting, presided over by IDRA chairman Dr M Aslam Alam, a representative of Sena Insurance PLC said an application had been submitted seeking permission to underwrite the insurance risks related to defence purchases. He said that if allowed, Sena Insurance would retain 50 per cent of the annual premium earnings, with the remaining 50 per cent distributed equally among all other non-life insurers.

A representative of the SBC informed the meeting that Sena Insurance is not a government organisation but is owned by SKS, a charitable body of the Bangladesh Armed Forces. Citing Section 16(1) of the Insurance Corporation Act 2019, he said there is no provision allowing any private insurer to underwrite risks of government properties. Any policy issued in violation of this section, he added, would be considered void under Section 16(3).

He further noted that if one private company is given the authority to underwrite public assets, other private insurers with high paid-up capital would demand the same opportunity.

A representative of Green Delta Insurance said the Act would need to be amended to accommodate Sena Insurance's request, and raised a question about whether the company would then withdraw from existing Memorandums of Understanding related to the matter.

A representative of Reliance Insurance also told the meeting that granting Sena Insurance such scope would require providing the same opportunity to other private insurers.

The president of the Bangladesh Insurance Association said the association had already expressed its opinion on the issue and that SBC had also submitted its own.

"If the Insurance Corporation Act is altered, the matter will come under question," he said. If the Act is repealed or amended, all private insurers would have to be allowed to insure government properties, he added.

The IDRA chief could not be reached by telephone for comment.

Sena Insurance CEO Brig Gen (Retd) Md Shafique Shamim told The FE on Friday that this is the second time IDRA has given an opinion on the matter. He said that in its previous opinion, IDRA stated that under Section 16(2) of the Act, the government-on public-interest grounds-may refix the percentage of insurance risks to be covered by the SBC.

The government has the scope to allow Sena Insurance to underwrite the risks of defence purchases under Section 16(2) of the Insurance Corporation Act, as stated by IDRA earlier, he noted.

syful-islam@outlook.com