The Bangladeshi government is losing income of BDT10bn ($118m) a year due to under-reporting by insurers of their financial performance, in line with the new chairman of the Insurance Development and Regulatory Authority (IDRA).
Dr M Mosharraf Hossain, who was appointed IDRA chairman in September, said this in an interview with The Financial Express recently.
Dr Hossain, who has over 20 years of experience in the insurance industry, said that many insurance companies used to keep up more than 200 bank accounts each to gather premiums however they would show significantly less than 50 accounts within their financial reports.
The market size of non-life insurance is BDT60bn, but only BDT30bn was displayed in the financial reporting, he added. "Where does this half of the total amount go? This is an extremely serious matter," he said.
Image of insurance industry
Dr Hossain, who holds a PhD in insurance from Dhaka University, also really wants to popularise insurance in the united states and ensure good governance in insurers in order to make the industry stable, accountable and transparent.
He said the negative perception of insurance among persons is among the key hurdles to the growth of the sector.
"The sector comes with an image crisis and there are intrinsic weaknesses in the sector, so my target is to create a positive image of the industry by strengthening the inner control system of companies," he said.
IDRA may also set the ratio of paid claims in a certain company to make sure accountability of the company and make its business stable.
"For instance, the percentage of the payment of claims by a company should be at least 80%. If so, if one company receives BDT1bn claims in a year, BDT800m ought to be paid," said Dr Hossain.