Businesses are in a race to get new licences for insurance companies after the government’s decision to allow entrants into the already saturated market, officials of the insurance regulatory body said yesterday.
The Insurance Development and Regulatory Authority (IDRA) has so far given the clearance for company names to over 100 applications since it published an advertisement for new insurers on February 20.
IDRA also decided to extend the deadline to receive applications by 15 days to April 15, from March 31 to accommodate more applications.
However, the regulator has not yet decided on how many fresh licences will be handed out.
“We are yet to decide on the number of new companies, but we will issue licences after proper scrutiny,” Shefaque Ahmed Actuary, chairman of IDRA, told The Daily Star.
Competence, integrity and qualification of the sponsors to become directors of the proposed companies will be evaluated before giving the licences, Ahmed said.
The would-be directors must pass a ‘Fit and Proper Test’ that includes having management, business or professional experience for a minimum of 10 years.
After scrutiny, IDRA will send the applications to the finance ministry for its final decision.
Bangladesh has 62 public and private insurance companies — eighteen of them, including state-owned Jiban Bima Corporation, provide life insurance while the rest are general insurance companies. Many insurers said the industry is already saturated and they fear more entrants would distort the market.
There is no scope for new companies in the general insurance market, which is already saturated,” said Nasir A Choudhury, founder and managing director of Green Delta Insurance. India, with such a big economy, has 20 to 22 general insurance companies, he said.
But he said around 10 new firms might be allowed in the life insurance sector, which is hugely under covered. “It won’t be proper to allow a dozen companies at a time; it should be done in phases.”
Demands for new insurance companies gained momentum after the finance minister’s announcement to issue new licences. The previous Awami League-led government also gave licences for a number of firms at the end of its tenure (1996-2001).
Until 2000, there were 19 general insurance and 10 life insurance companies. The number rose to 44 and 18 in 2001.
As per new insurance laws enacted in 2010, a paid-up capital of Tk 30 crore is needed for a life insurer and Tk 40 crore for a general insurer. (Source)
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