The Financial Express

Insurers owe SBC billions as premium

Show high expenses, commission as causes of default

| Updated: October 24, 2017 13:35:36

Insurers owe SBC billions as premium

Country's private-sector non-life insurance companies owe billions of taka to Sadharan Bima Corporation (SBC) in reinsurance premium against their risk the state-owned insurer covered, officials said.

The insurance firms allegedly fail to pay the premium to the SBC as their high office expenses and commission they pay to their customers and development officers gobble up their earnings.

Sources said some of the companies pay 60 to 70 per cent as commission to the customers and development officers and thus earn little and become financially too weak to pay reinsurance premium.

"Except for one or two, almost all of the 45 insurance companies owe some Tk 4.90 billion to the SBC," said a senior official of the state-run insurer.

"The condition is we will cover their risk provided they pay premium. Most of them have not paid premium for a long period," he said.

The official said insurance companies are to pay reinsurance premium quarterly to the SBC against the risk coverage. "If they don't pay premium in any quarter, the risks remain uncovered for that particular period."

Insurance officials, however, say they have a good number of claims unsettled with the SBC and so they are not paying premium sometimes.

The annual re-insurance premium of some 4 to 5 big non-life insurance companies stands at Tk 3.0 billion each while some 20 companies around Tk 500 million to Tk 1.5 billion and the rest below Tk 500 million each, according to officials.

Another senior SBC official said no matter whether the insurance companies pay premium or not, the Corporation annually does re-insurance of its risk abroad. "Though SBC is not getting premium from the local insurance companies, it is paying re-insurer and incurring financial loss."

"The insurance regulator should have played proper role compelling the local insurance companies to pay premium in each quarter in time to SBC," said the official.

Contacted over the phone, SBC managing director Syed Shahriyar Ahsan did not want to comment on this matter.

However, chairman of Karnaphuli Insurance Co Ltd Nizam Uddin Ahmed said the SBC makes long delay in settling claims of private-sector insurance companies, which should not be like this.

He said a good number of claims of insurance companies remained unsettled for long.

Mr Ahmed, however, said insurance companies should make the premium payment to the SBC in line with the terms and conditions. "Unless we pay to SBC, how the corporation will repay us if there be any claim."

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