Bangladesh: Regulator shelves new management expense limit
Source: Asia Insurance Review | Oct 2016
The insurance regulator has shelved a new directive on management expenses for non-life insurers after it found that the new required ceiling on the expenses was unrealistic for the industry.
The Insurance Development and Regulatory Authority (IDRA) says that insurance companies will instead continue to observe the 1958 Insurance Act on management expenses, reported The Daily Star.
IDRA’s decision to continue to observe the 1958 Insurance Act for management expenses has, nonetheless, not gone down well with insurers. The existing rule on management expenses based on the Act is outdated and needs to be overhauled immediately, said Ms Farzana Chowdhury, Managing Director and CEO of Green Delta Insurance.
Currently, there are 45 non-life insurance companies operating in Bangladesh. IDRA found that 40 out of the 45 non-life insurers have exceeded management expense limits.
Ms Chowdhury: “It is true that the companies have been spending more than the permitted amount under the 1958 Insurance Act. But we have to keep in mind that the law was enacted 58 years ago and doesn’t reflect the present scenario.”