Bangladesh Insurance Association (BIA) has initiated a move to facilitate investment of an amount of Tk 45 billion of life insurance fund in the country's stock market.
"We have a plan to move forward a proposal to the Dhaka Stock Exchange (DSE) for investing 30 per cent of Tk 150 billion life fund in stock market," Chairman of BIA Sheikh Kabir Hossain Thursday said.
To this effect, the BIA, the apex body of the country's insurers, has already formed a three-member committee with the task of finalising the proposal, Mr Kabir informed a group of journalists after an emergency meeting of the executive committee of the BIA at its office in the capital.
"We also want at least 10 per cent quota in the Initial Public Offerings (IPOs) to ensure safety and security of policy holders' money," he said.
He said that at present the BIA invested about five per cent of life fund of its member-companies in the stock market.
"We asked the committee to submit its report within seven days. After we receive the report, we will submit it to the DSE," he added.
Senior vice-president of DSE Dhaka Share Market and managing director of Sandhani Life Insurance Co Ltd Ahsanul Islam Titu is the convenor of the committee while managing director of Progressive Life Insurance Co Ltd MA Karim and vice-chairman of Karnaphuli Insurance Co Ltd Nasir Uddin Ahmed Pavel are its members.
The BIA chairman, however, reiterated the demand that the government should put on hold the implementation of the decisions that were taken by the regulatory authority. Those decisions, if implemented, will adversely impact the businesses in the sector, he claimed.
"Our demands are not illegal or irrational. We believe that good sense will prevail upon the Insurance Development and Regulatory Authority (IDRA) to appreciate our realistic demands," he added.
He said, the IDRA is now trying to regulate the insurance companies by issuing circulars but it has not yet prepared any guidelines on the basis of consultations with the stakeholders.
This practice runs afoul of the directive of the ministry of finance (MoF), he alleged.
"In accordance with the government directives, all the banks and financial institutions should run their business activities on all working days from 10:00 am to 6:00 pm. But IDRA directed the insurance companies to run their daily business activities from 9:00 am to 5:00 pm. This is badly hampering the functioning of insurance companies in coordination with those of the banks," he added.
He also called upon the government not to allow the chairman of IDRA to take any further decision regarding the businesses of, and imposition of any penalty against, the insurance companies.
He urged the IDRA to keep all the decisions that it has taken so far in abeyance and to sit in a meeting with the stakeholders so that the sector can smoothly move forward.
He said the decision which the IDRA has already taken about not allowing a person to remain a director of two financial institutions at a time, is "not business friendly" at all.
He also took a strong exception to the move taken by the regulator about imposition of penalty against the "errant" insurance companies.
The regulator -- IRDA -- has earlier asked all insurance companies to strictly comply with the provisions of Insurance Act of 2010.
It has directed all insurers to submit the names of directors, if any, who have been holding directorship simultaneously of more than one insurance company and also of any bank or other financial institution by October 16.
The directors of insurance companies have been opposing the provisions of the Insurance Act under which directors of any insurance company have been debarred from holding directorship simultaneously with any other insurance company or bank or financial institution, since the enactment of the Act.
IDRA issued the circular in conformity with the provisions of the Insurance Act of 2010 (75) which barred an individual from becoming the director of a bank, financial institution or an insurance company at a time.
IDRA officials said the circular was issued for establishing transparency in the insurance sector and addressing the issue of conflict of interests.
A banking company will be defined in accordance with the provisions of the Bank Company Act of 1991, while a financial institution will be defined in accordance with the Financial Institution Act of 1993, the circular said.
According to the Bank Company Act, 1991 (BCA, 1991), an individual is not allowed to become a director of more than one banking company or more than one financial institution or more than one insurance company at a time.
Managing Director and Chief Executive Officer (CEO) of Green Delta Insurance Co Ltd Nasir A Choudhury, vice-chairman of Nitol Insurance Co Ltd AKM Monirul Hoque, vice-chairman of Karnaphuli Insurance Co Ltd Nasir Uddin Ahmed, managing director (MD) of Progressive Life Insurance Co Ltd MA Karim and managing director (MD) of Continental Insurance Ltd Md Hashmat Ali, among others, were present at the BIA meeting on Thursday.
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