Corruption has taken root in insurance sector for non-compliance: IDRA
No one will be allowed to siphon off money or embezzle assets of insurance companies, said Mohammad Jainul Bari, chairman of Insurance Development and Regulatory Authority (IDRA) of Bangladesh.
The insurance sector has huge potential but non-compliance is the biggest problem, he said. "Due to a lack of compliance for a long time, irregularities and corruption have taken root in many companies.
"We have started working with these companies. We have instructed them to settle claims by selling properties, if necessary," said Mr Bari.
He said that the IDRA had called the board of directors of some errant companies during his nine-month tenure, which were not paying clients insurance claims timely.
Mr Bari was speaking as chief guest at the 'CMJF Talk' organised by the Capital Market Journalists Forum (CMJF) on Wednesday in the capital.
Replying to a query, he acknowledged that due to the irregularities by some companies, clients are losing confidence.
To address this issue, the regulator has removed directors accused of wrongdoing from the boards.
Mr Bari said that the situation of some life insurance companies is so fragile that they should be closed. "But if they are shut them, customers will suffer."
The IDRA chairman said the major incidents of corruption in the insurance sector had been centered on the purchase of lands. It has been seen that land worth Tk 10 million has been bought for Tk 300 million. Even after 10 or 15 years that land cannot be sold for half the purchase price.
"So no company is allowed to buy land unless it is very urgent and if the price is not reasonable".
In terms of coverage by the insurance sector, Mr Bari said, "we are lagging behind many countries including India."
To improve the situation, new products should be introduced.
He also stressed the need for digitization for the development of the insurance sector.
"The new generation is used to buying various products including food and clothing online. If insurance products can also be bought online, interest among them will be increased".
Also, digitisations would allow customers to check whether their premium has been deposited or not and what the status of the policy is, for example.
On the other hand, it will increase the confidence of customers, and curb the opportunities for irregularities and corruption.