IDRA fines 8 insurers over Tk 2.18cr

Charges include irregularities, fraudulence, misappropriation of funds, excess agent commissions and other misconduct.Meghna Insurance Company was fined the highest, Tk 1.30 crore, while Green Delta Insurance Company the lowest, Tk 1 lakh

The Insurance Development and Regulatory Authority (IDRA) has slapped eight insurance companies with a staggering fine of over Tk 2.18 crore for irregularities, fraudulence, misappropriation of funds, excess agent commissions and other misconduct.

Meghna Insurance Company was fined the highest, Tk 1.30 crore, while Green Delta Insurance Company the lowest, Tk 1 lakh.

The others are Eastern Insurance Company (Tk 30.50 lakh), Federal Insurance Company (Tk 19 lakh), Karnaphuli Insurance Company (Tk 13 lakh), Peoples Insurance Company (Tk 13 lakh), Bangladesh General Insurance Company (Tk 10 lakh) and Islami Commercial Insurance Company (Tk 2 lakh).

Only Islami Commercial Insurance Company is yet to pay the fine while Meghna Insurance Company is paying it in instalments.

The issue came up in an IDRA report for 2021.

"We hire an audit firm every year as a part of our regular work," SM Shakil Akhter, executive director and spokesperson of the IDRA, told The Daily Star.

"They audited the head office and branch level office accounts of the companies over a period of three months," he said.

A hearing is held on the findings and if the explanations are not satisfactory, the penalties are imposed, he added.

Such violations erode people's trust in the sector, apprehends Akhter.

Meghna Insurance Company was found to have been involved in irregularities, fraudulence and fund misappropriation.

Its additional managing director and chief executive officer (CEO), Mohammad Abu Bakar Siddique, acknowledged that the fines were imposed against 130 complaints dating back between 2011 and 2018.

"There is some truth to the allegations. Due to the market situation in the insurance industry, there was unhealthy competition. There is no denying it," he said.

He claimed that anywhere from Tk 60 lakh to Tk 70 lakh of the fine had been paid so far.

Islami Commercial Insurance Company was penalised for doing business on credit.

On why the fine was yet to be paid, its managing director and CEO, Mir Nazim Uddin Ahmed, explained that the fine was imposed on a branch manager who had resigned instead of giving an explanation.

''We wrote a letter to the IDRA for a decision. What can we do? We have not yet received any decision from the IDRA," he said.

In Bangladesh, there are 33 life insurance and 46 non-life insurance companies active. Of them, 49 are listed with the stock market.