Some private insurers are earning more from premiums on the insurance of government properties than they generate from their own business.
The private insurers get such premiums without giving any service.
Big market players said such a way of earnings encourages small companies not to merge despite the passage of new and stringent laws that have asked them to double their paid-up capital.
In line with a decision taken in the mid-1980s, private insurers get 50 percent of premiums earned from government insurance irrespective of their size and strength. State-owned Sadharan Bima Corporation that gives coverage to public properties gets the rest 50 percent.
Sadharan Bima Corporation, the state-owned general insurer that administers and distributes government premiums, also thinks time has come to review the system.
“There has been no review in the distribution mechanism for the last two decades. Many private insurers demand their share on the basis of their volume of business,” said Rezaul Karim, managing director of Sadharan Bima Corporation.
Although Sadharan Bima gives full coverage to the government properties, Karim said private insurers get 50 percent premium because they were not financially solvent at the time the decision was taken.
Like the private sector, the government has to insure its assets and properties. Bulk of the government insurance premiums comes from Biman Bangladesh Airlines, shipping, energy and fertiliser companies and from imports and exports.
Premiums from public insurance almost doubled in the last five years. It was Tk 244 crore in 2009 from Tk 138 crore in 2005. Government insurance generated Tk 163 crore, Tk 197 crore and Tk 223 crore as premiums in 2006, 2007 and 2008 respectively.
As per a decision of Ershad government in the mid-1980s, Sadharan Bima Corporation after taking its management and administration costs, distributes 50 percent of the premiums to the private companies. Accordingly, a private insurer got Tk 2.88 crore as gross premium in 2009. Currently, there are 43 private insurance companies in Bangladesh.
“The Ershad government gave us 50 percent of the premiums earned from the insurance of government properties against our demand,” said Nasir A Chowdhury, managing director of leading private sector insurer Green Delta Insurance.
Chowdhury said before that Sadharan Bima did the government insurance business solely.
“This is unfair that a small insurer will get the same as we do. This should be based on a company's volume of business,” he said.
“Small companies will create chaos if the premiums are distributed on the basis of the insurers' business volume. Let them get the benefits,” said AKM Rafiqul Islam, president of Bangladesh Insurance Association.
Rezaul Karim, however, hopes the situation would improve once the Insurance Development Regulatory Authority is formed.
Source: thedailystar.net
