Anomalies in insurance business

As a matter of fact development of industry and trade are interlinked with the expansion of insurance business. There has been brisk business in this sector when the expansion of industries took place in the 80's. From the beginning of 2000 insurance business has not made any progress although the number of insurance companies has increased. Compared to the growth of the insurance companies the country did not succeed in producing a sizable professionally skilled manpower to properly handle this intricate business.

This particular industry in Bangladesh is having serious problem because of stagnant economy coupled with political instability and deteriorating law and order situation. Apart from this unhealthy situation, this industry is also affected by the recent decisions of banning commission and credit system and imposing ceiling on establishment cost. According to this decision, establishment cost should not exceed 20 per cent. These measures, so to say, are not encouraging competition in insurance business. National Board of Revenue also has made this industry practically sick by charging VAT on deposit premium against open cover note executed between importer and insurance company. This also appears as a gross violation of insurance act.

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Experts in insurance companies are of the opinion that instead of reducing the cost of management it should be raised from the present ceiling of 35 per cent and agency commission should be reinstated to encourage the companies and their field level officers to advance the business. The Controller of Insurance should determine code of conduct for Development Officer, which should be strictly followed by all insurance companies. There has been bad precedent established by some Development Officers who switched over from one insurance company to another without settling outstanding insurance premium. This has caused serious difficulty in certain insurance companies. An insurance company should consider appointing a Development Officer only when he or she submits no claim certificate from the insurance company that he or she served earlier. Insurance companies while fixing up premiums for the insured item or items should strictly follow uniform tariff rate. The Controller of Insurance should work as watchdog to ensure the implementation of uniform tariff rate.

Another anomaly, which the insurance companies are confronted with, is that the process of settlement of claims of re-insurer company by Bangladesh Bank entails considerable period of time. This has caused loss of confidence in insurance company by foreign re-insurer.

Insurance is a must for everybody in the present twenty-first century. The importance of insurance, particularly health insurance, has assumed priority all over European countries. Therefore, the government should take such measures as should be congenial for the development of this nascent industry in Bangladesh. Mr. Shakawath Hossain, Chairman, Paramount Insurance Company confided to this writer that "many insurance companies are not sincere to their clients. Insurance company must provide service with promptness it deserves and settle claims as promptly as possibly on the basis of proven documents and evidence. In this free market oriented economy this industry's success lies in efficiency and intelligence in handling of the business."

Propaganda by the government and public relations campaign by insurance companies to make aware the people, business community and industrialists of the importance of insurance need to be carried out in the interest of the welfare of the people and for protection against unseen hazards.

Mohammad Amjad Hossain is a former diplomat and Advisor to Chairman, Paramount Insurance Company.