The Insurance Development and Regulatory Authority (IDRA) Wednesday issued a series of orders including cancellation of cost or adjustment of any claim, made by agents or persons involved with the business at the time of collection of premium payments by the policy-holders.
It is optimistic of resolving most of the problems relating to the life insurance companies through successful implementation of the orders.
Agents or others involved with the life insurance business often deduct different costs and claims, prior to submitting the premium earnings to their respective insurance companies.
Such adjustments lead to reduction in actual premium earnings by the life insurance companies.
The regulator has asked for paying agents' commission earnings, salaries and incentives through account payee cheques.
The IDRA also ordered all life insurers to introduce three-stage (or three-layered) business, in accordance with the provisions of the insurance act.
The move about 'three-stage business' comes as the country's eighteen life insurance companies have been maintaining nine to fifteen layers in their own way, defying the insurance act of 2010.
Such a multi-layered system of commission earnings by agents at multiple stages reduces the amount of actual premium earnings by the insurers to a substantial extent.
The three-layered system means that there will be only two officials under the main agents who work on a commission basis.
The regulator asked all life insurers to implement the three-tier system from the first day of February.
It also asked the life insurers to introduce their actuarial department which would be effective from March 30 next.
The decisions are the latest moves in a series of reforms initiated by the IDRA as it seeks to stamp out various irregularities and to ensure efficiency in one of the key financial sectors of the economy.
The IDRA officials said the regulator would monitor compliance with its orders by the life insurers.
IDRA chairman M Shefaque Ahmed told the FE: "The new orders will help boost actual premium earnings of the life insurers."
He said: "Most of the problems relating to life insurers will be solved thorough these orders."
The circulars signed by the IDRA chairman were sent to all life insurers Wednesday.
Source: thefinancialexpress-bd.com
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