The Insurance Development and Regulatory Authority (IDRA) is set to crack down on excessive commissions paid by insurance companies in the chase for business. The regulator's concern is that the practice would create unhealthy competition in the insurance industry and retard its development.
Under the rules, general insurers are allowed to spend 15% of their premium income as commissions but many are offering as much as 60%, Mr Nasir A Choudhury, advisor at Green Delta Insurance, told The Daily Star.
Mr Gokul Chand Das, member of IDRA, said: “We will soon serve a notice to insurance companies as the last reminder.”
After that, if the companies continue to fail to comply with the commission rule, regulatory action will be taken against them, he said. “IDRA will find a way by 2018 to stop the unhealthy commissioning,” he added.
The comments were made at a roundtable organised by the Bangladesh Insurance Association in collaboration with the news portal insurancenewsbd.com.
Mr Nizam Uddin Ahmed, founder chairman of Karnaphuli Insurance, said that the high commission expense is also crippling general insurance companies, making them unable to pay even customers' claims.