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Bank & Finance - Corporate - December 27, 2022

2022 was tainted year for insurance sector

Mahfuz Emran: Several directors are serving jail time for embezzling the money of insurance customers. The chairman of Insurance Development and Regulatory Authority (IDRA), the regulatory body of the insurance sector, has been involved in various controversies. In the end, he had to resign due to corruption allegations. In the year 2022, which is on the way to farewell, one incident after another happened in the insurance sector. Naturally, the year will be marred for the insurance sector.
Irregularities and corruption in the insurance sector are old issues, but the scandals like 2022 have never happened before. At one time, the Department of Insurance was known as the arena of corruption and irregularities.
The Awami League-led government came to power in 2010 and took the initiative to overhaul the insurance sector. The Insurance Development and Regulatory Authority (IDRA) was established as the new regulatory body for the insurance sector by abolishing the Directorate of Insurance. Along with that, the new insurance law was made.
After the establishment of IDRA, the top officials of the organization started taking strict action against corruption and irregularities. It takes a big shake in the insurance sector. Insurance companies came out of the shell of irregularities and almost came within the rules. But suddenly the regulatory body lost its way. In addition to the conflict between the top officials of IDRA, several officials are involved in various controversies.
However, the regulatory body still maintains a fairly good image. But in 2020 Dr. M. Mosharraf Hossain continued to get involved in one controversy after becoming the chairman of IDRA. There are many allegations against him including making an incompetent person the CEO of an insurance company by abusing power, demanding bribe from the company. At one point in 2022, he resigned from IDRA with corruption allegations in mind. Such allegations of corruption and irregularities against the head of the insurance regulatory body have never been raised before.
All of a sudden, Delta Life Insurance accused Musharraf of demanding bribe. Within a few days of raising such complaints from Delta Life, Mosharraf Hossain dissolved the board of directors and installed an administrator in the company. Along with this, Adiba Rahman was removed from the post of Chief Executive Officer (CEO) of the company. After that there were several cases in the court about Delta Life. In the end, Musharraf had to resign from IDRA after being accused of corruption.
In addition to Musharraf’s resignation from the post of IDRA chairman over corruption allegations, the most talked about issue in the insurance sector in 2022 was the jailing of Far East Islami Life founder MA Khalek and former chairman Nazrul Islam. Khalek and Nazrul were arrested this year on charges of embezzling customer money by looting Far East Life. Currently these two are in jail. The founding director and former chairman of the insurance company has not gone to jail before.
Seven directors in jail
Soon after Khalek and Nazrul went to jail for misappropriating the money of customers of Far East Islami Life, another scandal happened in Homalald Life. On September 21, 2022, Motijheel police station arrested seven London expatriate directors of Homeland Life Insurance from the company’s head office in a case of non-payment of insurance claims.
Among the seven directors are Homeland Life Insurance Company Vice Chairman Jamal Miah, Director Abdur Rab, Director Kamal Miah, Director Abdur Razzak, Director Abdul Ahad, Director Jamal Uddin and Director Abdul Hai. They were sent to Dhaka Central Jail in Keraniganj.
The seven directors were arrested in a case filed by four customers of Magura who did not receive insurance claim money. On September 26, their bail application was rejected by the court. Also, the accused were ordered to appear in Magura court on September 29. Then on September 29, the seven directors got conditional bail from Magura.
Attempted takeover of Delta Life
Among the hot topics in the insurance industry in 2022 was a group’s attempted takeover of Delta Life. This effort is led by Abul Khair Hiru, a well-known investor in the stock market. And Musharraf, who resigned from the post of IDRA chairman on corruption charges, tried to help Abul Khair Hiru.
As part of the scheme, Hiro used the BO accounts of himself and his wife, father and sister to buy large amounts of shares in Delta Life. But that effort failed when Musharraf abdicated. Later Hiro tried to become a director of Delta Life. That effort was also unsuccessful. With the intervention of the Ministry of Finance, IDRA removed the administrator from Delta Life. Along with this the responsibility of managing the company was given to the new board. The former directors of the company have regained the authority of Delta Life.
Mask Scam
Delta Life’s mask scam adds a new dimension to the various scams in the insurance sector in 2022. The former administrator of the company and former member of IDRA Sultan Ul-Abedin Mollah also had to go to jail in connection with the mask scandal.
Sultan Ul-Abedin Mollah, while being an administrator in Delta Life, bought 2 lakh 15 thousand masks illegally for Tk 1 crore 7 lakh 50 thousand without calling any tender. If you want to buy something worth more than Tk 8 lakh, you need the approval of the board of directors and notice in the national newspaper. He did not do any of this and gave the job to his close relative under the influence of power. Sultan Molla went to jail in a case that raised such allegations.
Claims still being wrangled
Insurance companies don’t pay claims to customers properly. On the contrary, by harassing the customers in various ways – this complaint is old but still the situation has not improved much. As before, different insurance companies are still struggling to pay the claims of customers. Every insurance company has insurance claims owed by customers.
Among these, the most discussed life insurance companies in the list of non-payment of insurance claims of customers in 2022 include Fareast Islami Life Insurance, Baira Life, Golden Life, Homeland Life, Sunflower Life, Padma Islami Life. These companies have huge customer insurance claim arrears.
Decreased insurance customers
The number of customers in insurance companies has also decreased due to various irregularities and non-payment of customer claims. Five years ago, the number of active insurance policies of life insurance companies doing business in the country was 2 crore 860 thousand. In 2022, it decreased to 73 lakh 83 thousand. That is, the number of policies of life insurance companies has reduced to half in a span of five years. Meanwhile, on the one hand, the number of life insurance companies doing business in the country has increased, and on the other hand, the country’s economy has grown.
At present, 35 life insurance companies are doing business in the country under public-private and domestic-foreign ownership. Five years ago, this number was 31. The number of customers in life insurance companies did not decrease overnight, has decreased consistently over the past few years. In 2019, the active policies of the life insurance companies doing business in the country were 97 lakh 40 thousand. The next year in 2020, it decreased to 85 lakh 60 thousand. In 2021, it further decreased to 82 lakh 80 thousand.

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