FE Report
The insurance regulator Sunday said thirteen insurers which had defaulted by not going public even after the expiry of an earlier stipulated three-and-a-half years’ time, would have to pay a penalty at an amount which is five times the existing rate from January, 2011.
The 13 insurance companies would have to pay Tk 5000 for each day in penalty, for not listing themselves with the bourses, compared to the existing rate of penalty at Tk 1000.
The defaulting companies include six life insurers and seven non-life companies.
Insurance Development and Regulatory Authority (IDRA) took the decision in this connection at a meeting held early this month. It will issue formal letters to the defaulting insurers within the next few days.
The IDRA officials said the regulatory authority had taken the decision, in accordance with the Section 130 of the Insurance Act of 2010.
IDRA chairman M Shefaque Ahmed told the FE: “We’ve levied the new rate just to force them to go public and ensure transparency.”
Earlier, the erstwhile chief controller of insurance (CCI), Mr Feroz Ahmed, imposed Tk 1000 for the companies’ failure to get listed with the bourses.
A penalty of Tk 1000 was then enforced for each day in 2005, despite the fact that defaulting insurers should have paid Tk 10,000 under Section 102 (1) of Insurance Act of 1938.
According to insurance rules 4 (A), 50 per cent of the total paid-up capital of the insurance companies will have to be contributed by the sponsors and the remaining 50 per cent are to be offered for public subscription over a period of three years from the date of registration of a company.
But the authorities had kept with them the right to extend the time for a period, not exceeding six months.
The IDRA officials said Homeland Life Insurance Company had been paying fines over the last 11 years.
The insurer was registered with the now-defunct CCI in 1996.
The officials at the IDRA said Homeland was the lone second-generation life insurer, which had failed to go public over the last 11 years.
Sunflower, Padma, Sun Life, Baira and Golden life insurance companies were registered with the CCI in 2000.
Two second-generation non-life insurance companies — Meghna and Bangladesh National Insurance — are yet to go public.
South Asia, Islami Commercial, Express Insurance, Desh General, and Union non-life insurance companies have been paying penalties over the last eight years for their failure to be listed.
Bangladesh Cooperative Insurance, formed in 1996, got a waiver on listing because the nature of the insurer being that of a ‘cooperative’.