Bangladesh government have decided to hand out fresh licenses to some new insurance companies within the next week.
This follows closely on the recent approval of some new banks this month.
The Insurance Development and Regulatory Authority (IDRA) will advertise this month, seeking ‘letter of intent’ from new companies who want to enter the insurance market.
“A gazette has been published for licenses to new insurance companies… Advertisement will be given out within next week,” IDRA member Fazlul Karim told bdnews24.com on Wednesday.
Fazlul Karim said the number and type of companies that would be granted approval would depend on evaluation of the applications.
“Scope is very limited for fresh general insurance companies, but life insurance companies will be preferred,” Karim said.
Government had published the gazette highlighting the restrictions for the license. The gazette officially reached IDRA on Feb 10.
IDRA sent a draft regarding registration of insurance companies in November last year to the Ministry of Finance.
Application forms would be supplied by IDRA, sources said. Application for one insurance company would require seven different forms costing Tk 500,000.
61 public and private insurance companies are now operating in Bangladesh. 19 of them including Jiban Bima Corporation provide life insurance while the rest are general insurance companies.
Demands for fresh insurance companies have been around for a while. A total of 500 applications have been filed with the Finance Ministry, but they will no longer be valid as aspirants have to apply afresh under specifications listed in the gazette .
Life insurance is not popular in Bangladesh with only five percent of its population covered by such policies.
Recently, Prime Minister Sheikh Hasina had said her government wants to provide insurance cover to agriculture .
The government approved licenses for setting up nine private banks this month. Three of them are owned by expatriate Bangladeshis and the rest are financed by domestic investors. Five of these banks have been cleared by Bangladesh Bank, four others are waiting for its clearance.
According to the published gazette, fresh companies will have to issue public shares within three years of approval. Public shares have to be 40 percent of the paid up capital, according to Insurance Act-2010 schedule 1.
For general insurance, minimum share for sponsors have to be Tk 4,800,000 and for life insurance it would have to be Tk 3,600,000. Sponsors can own up to 10 percent of the net company share.
However, with foreign company affiliation, the margin of 10 percent can be relaxed.
Sponsors cannot transfer shares within three years of business without permission from IDRA.
Sponsors seeking position of directors in the companies will be evaluated on the basis of skills, integrity and competence.
Those sponsors who have criminal record will not be granted license. Loan records within the last five years would also be monitored not only of sponsors, but also of his or her family.
Aspirants for directors of the proposed insurance companies cannot be director of other insurance, bank or similar companies. The Board of Directors will be limited to 20 people including two independent directors.
Up to two members of a family can be member of the board, however, that would require ownership of more than five percent of company share.
Chief Executive Officers of the proposed insurance companies must have at least 15 years experience in insurance business including three years experience in the position junior to CEO. Age limit is from 40-67.bdnews24.com