Most new life insurance cos struggle to survive

Mahfuja Mukul: The number of insurance companies in the country is more than the demand, the government has approved new insurance companies one after another. Most of these insurance companies are not doing well due to political considerations. Also, the companies are not obeying the law.
The companies are recklessly spending the money of the insurance customers in violation of the law. This has resulted in the life funds of several new life insurance companies becoming negative. Overall, on the one hand companies are struggling to survive, on the other hand, customer refunds from these institutions are falling into uncertainty.
Regulatory body Insurance Development and Regulatory Authority (IDRA) is worried that newly approved life insurance companies are not doing well. However, due to legal weakness, the organization is unable to take strict action. For this reason, IDRA is planning to amend the Insurance Act.
On the other hand, life insurance officials say that several newly approved life insurance companies are in serious trouble. These companies have already been involved in various irregularities. As a result, an image crisis is being created in the entire insurance sector. Therefore, strict action should be taken against these companies in the interest of the insurance sector as a whole. If necessary, the business of these companies should also be closed.
Akiz Takaful Life is a company that started business in the country as a new insurance company. In 2021,
this life insurance company violated the law and spent an additional 1.5 million rupees in the management sector. The company has spent a total of Tk 1 crore 39 lakh in the management sector. But according to the law, the maximum expenditure limit of the company in this sector was 34 lakh taka. The company that spent such money earned a total premium income of Tk. 53 lakhs during the year. That is, the income is more than double the expenditure.
In this, the life fund of the company stands at negative 6 lakh taka.
Another company whose life fund turned negative is NRB Islami Life. At the end of 2021, the life fund of the company stood at negative 18 lakh taka. This company, which earned a premium of Tk 5 crore 56 lakh in the year, spent Tk 6 crore 50 lakh in the management sector. That is, this company has also made more expenses than income. In violation of the law, the company has spent an additional 1 crore 21 lakh taka in the management sector.
Jamuna Life is on the list of life funds becoming negative. At the end of 2021, the life fund of this company stood at 3 crore 36 lakh taka. The company has also spent excess money in the management sector in violation of the law as the life fund turned negative. In 2021, in violation of the law, the company spent an additional amount of Tk 333 million in the management sector.
Jibon Bima Corporation (Life Insurance Corporation) of Bangladesh, the only life insurance company of domestic-foreign joint ownership, is also not able to rein in the cost. In 2021, this insurance company violated the law in the management sector and overspent Tk 2 crore 68 lakh. This company, which has a premium income of Tk 15 crore 40 lakh, has spent a total of Tk 8 crore 9 lakh in the management sector. The company has a life fund positive despite overspending in violation of the law. At the end of 2021, the life fund of the company stood at 16 crore 45 lakh taka.
Chartered Life is on the list of overspends. In 2021, the maximum expenditure limit of this company in the management sector was Tk 20 crore 84 lakh. However, the company has spent 24 crore 7 lakh taka. In other words, 3 crore 23 lakh rupees have been spent in violation of the law. The company has a life fund positive despite overspending in violation of the law. At the end of 2021, the life fund stood at 36 crore 16 lakh taka.
Zenith Islami Life also spent extra money in the management sector. In 2021, the maximum expenditure limit in the management sector of the company was Tk 14 crore 61 lakh. However, the company has spent 16 crore 41 lakh taka. That is, additional money has been spent in violation of the law 1 crore 80 lakhs. Overspending This company has a life fund positive. At the end of 2021, the life fund stood at Tk 4 crore 43 lakh.
Diamond Life is another company that is unable to rein in expenses. In 2021, this life insurance company violated the law and spent over Rs 2 crore. According to the law, the maximum expenditure limit of the company in the management sector during the year was Tk 12 crore 36 lakh, but the company spent Tk 14 crore 35 lakh. The life fund of this company, which has spent extra money in violation of the law, stands at 3 crore 72 lakhs.
Another company that started a new business is Bengal Islami Life. In 2021, the maximum expenditure limit of this company in the management sector was Tk 23 crore 38 lakh. But the company has spent 27 crore 81 lakh taka. In other words, an additional 4 crore 42 lakh rupees have been spent in violation of the law. The company’s life fund, which has spent money in violation of the law, stands at Tk 3 crore 10 lakh.
Mercantile Islamic Life Insurance is also named in the overspending list. According to the law, the maximum expenditure limit in the management sector of this company in 2021 was Tk 21 crore 84 lakh. However, the company has spent 27 crore 37 lakh taka. In other words, an additional 5 crore 53 lakh rupees has been spent in violation of the law. The life fund of the company, which has spent extra money in violation of the law, stands at 26 crore 79 lakhs.
Guardian Life is well positioned among the new life insurance companies. The expenses of this company are on the one hand as within the legal limits. On the other hand, life fund has increased continuously. In 2021, the company’s management sector expenditure cap was Tk 76 crore. Against this, the company has spent 65 crore 3 lakh taka. That is, Tk 10 crore 97 lakh has been spent less than the legal limit. This has had a major positive impact on life funds. At the end of the year, the life fund of the company stood at 288 crore 3 lakh taka.
When contacted, Chief Executive Officer (CEO) of Pragati Life. Jalalul Azim told that several of the newly approved life insurance companies are not doing well. Life funds of several insurance companies have turned negative. A life insurance company’s life fund is negative, meaning the future of that company is zero. That company should not be allowed to operate like me. Those who have this condition are ruining the market. Destroying the image. This should be looked into by the regulatory body and they should be punished.
Jamuna Life CEO Kamrul Hasan Khandkar said that the problem is not unique to Jamuna Life when asked about the life fund becoming negative and spending extra money in the management sector. This is happening in many insurance companies. So, this is not a problem of Yamuna Life alone, it is a problem of the total industry.
SM Ziaul Haque, who currently serves as the CEO of Chartered Life said about the excessive spending of money in violation of the law in the management sector, there are many reasons for the excessive spending of money in the management sector. We plan to bring the expenditure within legal limits. In the meantime, we have brought down the rate of overspending. Hopefully this year (2022) the expenditure will be below the legal limit.
Akiz Takaful Life CEO Mohammad Alamgir Chowdhury told, “In 2021, we did business for only one and a half months. I have started business from 15th of November. We have had various expenses to start the business before. Because of this, it is normal that the cost will be a little higher. In 2021 the expenditure will be higher but in the future our expenditure will be below the legal limit. In 2022 the expenditure will be less than the limit of management expenditure in the law.
A responsible official of the Ministry of Finance said that the main problem of the insurance sector is ownership. Most insurance companies are owned by politicians. Moreover, there is an image crisis in this sector. All in all, our country has not been able to develop the insurance sector the way it is supposed to. But now people’s awareness towards insurance is increasing. Therefore, it is expected that the insurance sector will develop in the future.
IDRA spokesperson SM Shakeel Akhtar told that not only the new insurance companies but also several old companies are not doing good business. Due to the law, it is not possible to take strict action against these companies. So, we have taken the initiative to amend the Insurance Act 2010. If the law is amended, strict action will be taken against these institutions.