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Fundamental and Important activities of Insurance Development and Regulatory Authority

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20th-Nov-2016       Readers ( 502 )   0 Comments
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Zuber Ahmed Khan
Member, IDRA :
The Insurance Industry has an important role in attaining sustainable economic development of the country. It is an important part of the financial system and economy. Life Insurance, apart from providing financial security to the  people facing uncertainties of life, is an important tool for mobilizing the savings of the people, while non-life insurance provides protection against economic losses to the assets, both individual and national, arising from accidents of different nature including natural catastrophes. Funds generated by activities of both life and non-life insurance are invested in the various spheres of economy of the country thus undoubtedly making valuable contribution to the economic development.
Realizing that the Insurance industry of Bangladesh must operate within a sound framework of laws, Rules and Regulations and considering that the prevailing legal framework as provided by Insurance Act of 1938 was archaic and not commensurate with requirements of the 21st century, the Government decided to introduce new laws, Rules and Regulations. The Parliament, on 3rd March 2010 passed two laws, the Insurance Act 2010 and Insurance Development and Regulatory Authority Act 2010, by abolishing Insurance Act 1938 with a mission to make the insurance industry as the premiere financial service provider and to protect the interest of the policy holders and other stake holders with unbiased treatment, integrity and high standard. Insurance Development and Regulatory Authority Act 2010, gazetted on 18th March 2010, formed an Authority on 26th Jan 2011 comprising of 4 Member and a Chairman, which started its operation on 27th January 2011, initially, The Insurance Development and Regulatory Authority (IDRA) started its operation on 27th January 2011 with Mr. M. Shefaque Ahmed, Actuary as its 1st Chairman along with other two members. IDRA has so far undertaken various initiatives and measures to reform the insurance sector and bring in much needed discipline and sound business principles in the industry. Some of them are:
1) To build up efficient manpower and weed-out fake agents from the market, IDRA made it mandatory that the agents must undergo necessary training before applying for Agency License. IDRA hopes that by making agent's  training mandatory, awareness about insurance will increase.
2) A Company should notify IDRA within two days of receiving any complaint from any Policy holder, share holder or stake holder in respect of any aspect of their operations.
3) In order to ensure proper transparency in acquisition and disposal of fixed assets, IDRA has made it mandatory for Insurance Companies to take prior permission from IDRA before purchasing, selling or transferring any property.
4) In order to ensure that the Company's decisions are consistent and in compliance with all laws of the country and for the purpose of monitoring,  all companies are required to send  minutes of meetings of  Board, Management committee, Audit Committee and Claim committee.
5) In order to do away with unhealthy practices of business, IDRA has been taking actions to ensure that tariff rate is properly observed, no business is done on credit, maintain commission levels as prescribed. In life sector, IDRA has reformed commission based business structure of Life insurance companies, and made it obligatory to appoint actuaries in the company.
6) After starting its operation, IDRA has finalized 3 Laws and 13 regulations which have already been gazetted, 37 others are  in process for finalization.
7) Under the leadership and guidance of the Chairman Mr. M Shefaque Ahmed, Actuary and with the cooperation of insurance companies and corporations, IDRA has successfully organized "1st SAARC INSURANCE REGULATORS CONFERENCE 2013" on 06th and 07th April 2013 where our Honorable Prime Minister of Peoples' Republic of Bangladesh Sheik Hasina has very kindly graced the occasion as Chief Guest and inaugurated the conference.
8) As per section 73 of Insurance Act 2010, IDRA has formed "BIROD NISPOTTI COMMITTEE - 2012" in January 2015 headed by one retired Justice of High Court Division of the Supreme Court of Bangladesh, and comprising 4 other members including one member of IDRA by virtue of his position.
9) "JATIO BIMA NITI -2014" has already been gazetted and published by the Government of Bangladesh where 50 mandated issues have been incorporated. IDRA has taken its initiatives to implement its part.
10) In order to implement the mandate of JATIO BIMA NITI - 2014, IDRA has already organized BIMA MELA - 2016 which gained a very positive response from the public. IDRA has also sought a date to declare as BIMA DAY from the Government through the Ministry of Finance as part of implementing the mandate of "JATIO BIMA NITI -2014".
11) This year IDRA has taken initiative to put bill boards at 23 important points of different part of Bangladesh highway/road network.
12) IDRA has undertaken inspection of many insurance companies and have engaged Chartered Accountant firms to audit the books of account of many life insurance companies as a part of IDRA's supervision and control of their expenses.
In a nut shell, IDRA is striving hard to keep the industry well regulated, despite its limited resources and manpower.
By taking initiatives by IDRA in the light of JATIO BIMA NITI -2014 and with the co-operation of all  stakeholders of insurance sector, IDRA believes that insurance sector will move in the right direction as a part of financial system and contribute immensely to  economic development of the country.

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