State insurer wants food directorate to resume coverage

Sadharan Bima Corporation (SBC) has requested the food directorate to resume purchasing insurance coverage from the state-run insurer, in line with legal requirements that mandate government entities to buy coverage from the corporation.

Officials said the appeal follows a long period during which the directorate has not sought insurance from the SBC, despite being a major importer of rice and wheat under government-to-government arrangements.

The insurer argues that bypassing the SBC has resulted in significant foreign currency outflows and contradicts provisions set out in the Insurance Corporation Act 2019.

In addition, the SBC has requested that all food import agreements include a clause stipulating that insurance coverage must be purchased from the corporation, officials said.

The call was made recently after the food directorate had stopped taking insurance coverage from the SBC for an extended period.

Officials said the food directorate imports large volumes of rice and wheat from various countries each year under government-to-government arrangements to meet domestic demand.

In previous years, the directorate had purchased insurance for these imports from the SBC. However, over the past decade, it has not been buying coverage from the corporation.

In a recent letter to Director General of Food Abul Hasanath Humayun Kabir, SBC Managing Director Harun-Or-Rashid

noted that the government has completed procedures for importing thousands of tonnes of wheat from the United States.

The SBC had already urged the directorate to obtain insurance for the imports from the corporation, he wrote.

Mr Rashid also pointed out that Section 16(1) of the Insurance Corporation Act 2019 makes it compulsory for all government entities to obtain insurance coverage from the SBC.

He added that when the food directorate imports goods under cost, insurance and freight (CIF) or carriage and insurance paid to (CIP) terms, exporters procure insurance from their own countries, but Bangladesh ultimately bears the cost.

As a result, he wrote, foreign currency flows abroad to pay for insurance coverage, an outcome that is "not lawful".

"If the insurance coverage is purchased from the state-run SBC, public money remains within the government, and taxes and dividends go to the public exchequer. That protects the interests of the country," the SBC chief wrote.

He also noted that the Advisers' Council Committee on Government Purchase approved a proposal on November 18 to import 0.3 million tonnes of rice and 0.3 million tonnes of wheat.

Mr Rashid urged that insurance for these imports be taken from the SBC to safeguard national interests.

A senior SBC official told the FE that many state agencies fail to buy coverage from the corporation simply because they are unaware that it is mandatory.

As a result, he said, large amounts of hard-earned foreign currency leave the country each year, causing financial losses.

Director General of Food Abul Hasanath Humayun Kabir could not be reached by telephone for comment despite repeated attempts.

syful-islam@outlook.com