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'Islami life insurance companies are facing trouble in absence of Takaful laws'

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20th-Nov-2016       
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Kazi Mohammad Mortuza Ali
Chief Consultant
Prime Islami Life Insurance Limited.  :

Kazi Mohammad Mortuza Ali, former Managing Director of Prime Islami Life Insurance Co Ltd (PILICL) who is presently serving the company as Chief Consultant has shared his years of experience on Islami insurance with the New Nation (NN). Senior Reporter Gazi Anowarul Hoque has taken the interview.
NN:  Could you please state what is the benefit of Life Insurance a new person will be attracted for?
Mortuza: Life insurance is a unique combination of savings and protection of risks in life. A person can be benefited in many ways while taking a life assurance policy viz.
(a) One can be relieved from anxiety and uncertainty about the welfare of his family and of oneself;
(b) Life insurance policy can help people to save their hard earned money to meet future needs.
(c) Life insurance helps to grow a habit of savings, and thus protect from wasteful spending.
(d) Through long-term savings, policyholders can build capital which can be used in future for purchases of land, building construction and arranging fund for higher education/ marriage of children etc.
(e) Policy holders/nominees of policyholders get lump sum money / periodical payments from insurance companies which can be invested for income generation.
NN:  What is the specialty of Insurance policies of your company upon which footing we may point it a distinctive insurance company?
Mortuza: Our products are designed and developed to cater the needs of all segments of the market. We have introduced innovative products which are easy to understand, ensures more benefit to the policyholders at the same time those are comparatively cheaper. We provide maximum benefit to policy holders and charge minimum premium from them.  Furthermore, we ensure equal bonus to all policy holders large or small, irrespective of sum insured.
NN:  What are the problems existing in Life Insurance Companies in Bangladesh?
Mortuza: There are many problems that are affecting life insurance industry of Bangladesh some of those are:
(a) Insurance rules & regulations are not adequate for smooth running of this industry. New rules & regulations need to be promulgated covering different areas of operation, especially for Islami insurance (Takaful) companies;
(b) Unhealthy competition is another big problem for life insurance industry. To procure business, some life insurance companies provide extra benefits to sales people and expend beyond the limit set by the Insurance Act;
(c) Shortage of skilled and qualified people is a great hindrance for the development of this sector particularly, life insurance companies business and services are affected seriously due to lack of adequate skilled and qualified personnel in the area of Actuarial, Underwriting, Claims, Reinsurance,  Accounts, Finance and Information Technology;
(d) Lack of research, innovation and appropriate training are other set backs of the life insurance industry of Bangladesh.
NN: As per section 7 of the Insurance Act-2010, no insurance company is entitled to deal in conventional insurance business and Islamic Insurance business concurrently. However insurance Development and Regulatory Authority (IDRA) has failed to make any acceptable Islamic Insurance policies. In such a situation, this important segment of Insurance is still whirling into uncertainty. What do you think about it?
Mortuza: Section 7 of the insurance Act -2010 is applicable for General Insurance but conventional life insurance companies are allowed to sale Islami insurance products through takaful windows. This provision has pushed the full fledged Islami life insurance companies to a difficult situation. Islami life insurance companies are in serious trouble in the absence of takaful laws/ Rules for Islami insurance. Draft takaful Rules for conducting Islami insurance business has been submitted. We hope that after reviewing the draft, the authority will soon introduce takaful rules to conduct Islami insurance business smoothly, effectively & transparently. The rules must specify the modus operandi for window operators.
NN: We know that Islamic Insurance companies had submitted a concept of Islamic Insurance which is called 'Takaful' to Insurance Development and Regulatory Authority (IDRA) on 09 October 2012. Has IDRA finalized the proposal?
Mortuza: Draft rules for takaful was submitted by IDB Consultant in 2011. There after long time has passed. We are still waiting for its finalization and implementation. Draft Takaful Act was also submitted during the reign of the then caretaker government. I was involved in the process of drafting both the Act & Rules. No tangible development is seen during last several years.
NN: Recently the Government has authorized more Life Insurance Companies to conduct insurance business in Bangladesh. What shall be its consequence-may the sector rise or fall? What is your opinion?
Mortuza: We think that by permitting so many new life insurance companies to operate in the market at a time the already prevailing unhealthy competition will be intensified and the industry will be badly affected. The consequence may be grave. Few of the old and new companies in the market can turn out to be sick in the long run. Already a few life insurance companies are on the verge of insolvency. Let us hope, that all will be able to overcome the present crisis of market.
NN: We know that insurance sector faces scarcity of skilled manpower .We know that Insurance Academy is training the manpower in the sector? Is such a measure minimizing the demand of the industry?
Mortuza: Historically, the life insurance industry is a neglected sector and in the past little attention was given for human resource development in this sector. Educated people did not come forward to save the industry. Many of the executives in development sector are under-graduate. Even in the present time, life insurance companies can not attract the attention of quality graduates due to low and uninspiring compensation package. Trainings provided by InsuranceAcademy are not sufficient for the development of vast human resources in life insurance industry. InsuranceAcademy should conduct need based training program involving life insurance companies for design and development of various training program.
Mortuza:  It is partly true but certainly not in all cases Stakeholders of life insurance companies in the few cases might be affected due to irregularities. Lack of commitment and lack of knowledge of some life insurance professionals are the key problems. If internal control mechanism of insurance companies is developed the situation will be improved definitely.
However, Kazi Mohammad Mortuza Ali passed B.Com (Hons), M.Com, and secured L.L.B.  from Associate of Chartered Insurance Institute (ACII) London. He is a graduate from Norwegian Shipping Academy also. He is presently serving as Chief Consultant (CC) of Prime Islami Life Insurance Limited, Dhaka. Also served as Chief Executive Officer (CEO) of Prime Islami Life Insurance Limited from 2002-September, 2015.
He served as Director (CEO) of Bangladesh Insurance Academy during 1995-2002.

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