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Corporate - April 18, 2024

Insurance amendment Act under consideration

Rafiqul Islam Azad : The government is contemplating amendments to the Insurance Act-2010, aiming to render it more contemporary and efficacious. The objective is to ensure robust protection for both customers and companies within the insurance sector while harmonizing its provisions with other pertinent laws.
The Insurance Development and Regulatory Authority (IDRA), the regulatory body overseeing the insurance sector, has already taken proactive steps to revise 50 sections of the Insurance Act-2010, as per insider sources from the IDRA.
To initiate the amendment process, a draft of the proposed revisions was unveiled on the IDRA’s website on March 28, revealed a senior IDRA official. Recommendations for modifications, additions, and deletions to various sections of the draft law have been meticulously crafted based on inputs from stakeholders and an examination of legal frameworks in other jurisdictions. The comprehensive feedback from concerned stakeholders, experts, and the public has been actively sought, he added.
Stakeholders have been urged to provide their feedback on the draft within the next 15 working days (by April 24). Failure to submit feedback within the stipulated timeframe will prompt the IDRA to proceed with necessary actions, assuming no objections or opinions have been raised, he further clarified.
Copies of the draft amendment to the insurance law have been disseminated to key entities, including the President of the Bangladesh Insurance Association, Managing Directors or Chief Executive Officers of all life and non-life insurance institutions, the President of the Bangladesh Insurance Forum, and the Director of the Bangladesh Insurance Academy, as per sources within the IDRA.
One proposed addition introduces the concept of an independent director, defined as an individual detached from the management and shareholders of the insurer, tasked with ensuring compliance with relevant laws and advocating for the insurer’s best interests, as per sources.
The solicitation of opinions is solely geared towards safeguarding the insurer’s interests and excludes any past, present, or future interests of the insurer or associated individuals. Moreover, insurers are prohibited from extending loans or providing financial benefits to directors, shareholders, or their families without prior IDRA approval.
Every insurer is mandated to appoint the requisite number of actuaries with approval from the IDRA, whose qualifications, duties, benefits, and conditions will be determined by the regulatory authority.
The proposed amendments also entail the appointment of a qualified individual, as prescribed by the IDRA, for the positions of Chief Financial Officer or Secretary within the organization, subject to approval.
Additionally, the proposed revisions stipulate that the dismissal of any chief financial officer or company secretary authorized by the insurer requires prior approval from the IDRA. Furthermore, individuals dismissed under such circumstances will be ineligible for employment in the insurance sector for a period of five years.
Another section of the proposed amendments outlines stringent penalties for individuals found guilty of inducing insurance contracts through misleading, false, or fraudulent statements, with fines up to Tk 20 lakhs and imprisonment for a term of up to three years, or both.
Furthermore, any director, shareholder, chief executive officer, manager, or other officer of an insurer failing to comply with the provisions of the Insurance Act shall face fines ranging from Tk 100,000 to Tk 10 lakh, with an additional fine of Tk 10,000 per day for continued violations, if no provision similar to the Insurance Act-2010 exists.
Jahangir Alam, IDRA Director (Non-Life) and Spokesperson, emphasized the necessity of amending the law to reflect the evolving landscape of the insurance industry, underscoring the need for clarity and comprehensiveness.
AKM MonirulHaque, Vice President of the Bangladesh Insurance Association, expressed tentative approval of the proposed amendments, recognizing the imperative to modernize the legislation to better serve both customers and the industry at large.

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