22 March 2017, Wed, 10:07

Ministry\'s interference halts audit on insurance cos

The finance ministry has imposed a moratorium on audit by the Insurance Development and Regulatory Authority (IDRA) of a particular insurance company.
As a result, the regulatory body’s audit of insurance companies has come to a complete halt, according to authorities concerned.
The relavant rules on IDRA and insurance companies do not encourage interference from the finance ministry’s bank and financial institutions division.
Thus, the Insurance Act, 2010 has come into question and so does IDRA’s authority over the insurance companies operating in the sector.
IDRA monitors and regulates the country’s insurance companies that handle huge sums of money of the millions of clients. The companies were spending a lot of money in the name of management costs, according to allegations.
In such a backdrop, IDRA decided to conduct a special audit on 25 insurance outlets at the end of the past year.
The IDRA also appointed well-known auditors of the country to the 25 insurance companies in several phases between 20 October last year and 22 January this year.
The auditors were appointed to Republic, Express, Continental, Phoenix, Green Delta, Pragati, Union, Federal, Pioneer, Bangladesh National, Janata, Northern General, Takaful, Sonar Bangla, Meghna, United, Global, Reliance, Desh General, Prime, Dhaka, Central, Peoples, Rupali and Islami Insurance companies.
“The ministry’s intervention is giving a wrong signal. When IDRA has been given the audit authority as per law, the ministry is not a party at all,” said Dhaka University’s banking and insurance department’s chairman, Abu Taleb.
He said, “The moratorium on appointment of auditors should be withdrawn for the sake of the insurance sector.”
According to the Insurance Act, 2010, IDRA can audit any of the country’s insurance company.
IDRA sources said, first of all, Express Insurance company filed an appeal to the IDRA authorities to defer the audit session for three months saying its listing with the stock exchange market needs a bit more time. Green Delta Insurance company then came up with the same appeal. Finally, Bangladesh Insurance Association (BIA), an organisation of the insurance owners, filed a plea defending the companies to stop the scheduled IDRA audit.
BIA president Sheikh Kabir Hossain said, “After initiation of 2010 Insurance Act, many of the provisions have not been formulated as yet.”
“If the audit is done under the law formulated in 1958, it would not be justifiable. Thus, we requested [the authorities concerned] to scrap the audit process,” he pointed out.
However, IDRA rejected the plea saying that the audit had no connection with the framing of regulations of the Insurance Act 2010.
After the rejection, Green Delta Insurance appealed to the finance ministry’s bank and financial institutions division seeking a halt in the IDRA audit that was scheduled to begin on 27 December last year.
In response, the finance ministry sent a letter to the IDRA authorities to stop its audit process on the particular insurance company.
In reply to the ministry order, IDRA chairman M Shefaq Ahmed sent a letter to the bank and financial institutions division’s secretary Md Yunusur Rahman to withdraw order.