Insurance sector rife with unabated corruption

There are allegations of massive corruption against the chairmen and directors of the insurance companies. Despite these allegations, the Anti-Corruption Commission (ACC) is unable to investigate as these insurance officials are not recognised as public servants under any laws of the country.

Two years ago, the director general and secretary with additional duty of the ACC Mohammad Munir Chowdhury sent a letter to the secretary of the Financial Institutions Division identifying the problem of not being able to investigate in the insurance sector.

In the letter sent on 17 January 2019 on behalf of the ACC, Munir Chowdhury proposed to take necessary steps to amend the law in public interest. Five months ago Asadul Islam became the secretary of the financial institutions department and is still there.

Meanwhile, before retiring on 14 December, ACC secretary Muhammad Dilwar Bakht also wrote a letter to the secretary of the financial institutions division department about the same issue. But the financial institutions division has left the proposal hanging in air for two years.

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Despite allegations of corruption in insurance companies, they are not considered as financial institutions and the board members, officers and employees of the insurance companies are not considered as public servants, so it is not possible to address the issue of corruption, according to ACC's letter

It was not possible to talk to the secretary of the financial institutions division as he was abroad. However, additional secretary ABM Ruhul Azad told Prothom Alo, “We will study the letter soon and a decision will be made taking all matters into consideration.”

In both the letters, the ACC has mentioned that even though insurance companies operate around the insurance related works, the nature of their work mainly involves financial transactions with the people. They have all the characteristics of a financial institution. But the chairmen and the directors of the insurance companies are not recognised as public servants in the Insurance Act of 2010.

The letter said ACC is not included in the definition of financial institution. The definition itself needs to be amended. Section 110 of the Banking Companies Act, 1991 states, "In the sense in which the word public servant is used under the Penal Code of 180, the chairman, director, auditor, liquidator, manager and other officers and employees of a bank company shall also be considered as public servants."

There are 78 insurance companies operating in the country currently, of which 32 are life insurance companies and 48 are non-life or general insurance companies. Among them are government-owned Jibon Bima Corporation and Sadharan Bima Corporation. Besides, the foreign insurance company MetLife is also operating here with branch offices. LIC Bangladesh Limited is a joint venture company with India.

M Mosharraf Hossain, chairman of the Insurance Development and Regulatory Authority (IDRA), the regulator of the insurance sector, told Prothom Alo that the government has the authority to amend the law. However, in the financial sector, if the board members and officers and employees of the banking sector are public servants, then those in the insurance sector are also public servants.

Despite allegations of corruption in insurance companies, they are not considered as financial institutions and the board members, officers and employees of the insurance companies are not considered as public servants, so it is not possible to address the issue of corruption, according to ACC's letter. In both the letters of the ACC, it has been suggested that the insurance law be amended to treat the board members, officers and employees of the insurance company as public servants as in the he banking company law.

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However, the Bangladesh Insurance Association (BIA), an association of insurance company owners, and the Bangladesh Insurance Forum (BIF), an association of managing directors (MDs), have been silent on amending the law. They do not want any ACC investigation into their affairs. Yet they fail to come up with any strong argument to justify this stand.

When asked, BIA chairman Sheikh Kabir Hossain told Prothom Alo that both bank and insurance are financial sectors and both provide services. But for the banking sector, profit comes first, service later. And in the insurance sector, service comes first, profits later. However, the government can amend the necessary laws if it wants.

BIF chairman BM Yusuf Ali declined to comment.