News Details

IDRA limits car purchase price for Ins cos


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Jasim Uddin Haroon
Insurance regulator Tuesday issued a circular imposing ceiling on the prices for the purchase of motorised vehicles to be used by the country's insurance companies.

In another circular, issued on the day, it also directed the country's 62 insurers to take authority's permission prior to purchasing any building, land, and construction of any structure.

However, the Insurance Development and Regulatory Authority (IDRA) said the number of cars to be used by the insurers should grow in proportion with the overall expansion of a company.

The IDRA said the prices of motorised vehicles to be used by chairmen and chief executive officers should not exceed Tk 4.0 million.

It also said only chairmen of insurance companies would be entitled to enjoy the car facility and the other members of boards would not enjoy it.

The circular said vehicles purchased for the chairmen and the chief executive officers will only be replaceable, after their use for, at least, five years.

It said any insurer that maintains a pool of transport, the number of vehicles will be four at pool, in that case. The price of each car to be used in the pool will not exceed Tk 2.5 million, it added.

The regulator said insurance companies must submit detailed reports about maintenance cost and other expenditures on account of cars to their respective boards in every six month.

The move came following findings by the IDRA about possession of an 'excessive' number of motor vehicles by some insurers, particularly the life insurance companies.

The IDRA findings revealed that many directors, advisers, consultants and high officials of some insurers have been using vehicles at the cost of company's fund.

The costs of fuels and maintenance on account of such vehicles are causing a significant increase in overhead expenditures of the companies.

Each life insurer owns more than 150 vehicles on an average, according to the regulator.

Bangladesh Bank (BB) recently issued a similar circular for commercial banks and non-bank financial institutions limiting expenditures for motor vehicles.

The central bank will allow not more than Tk 3.5 million to buy cars and more than Tk 5.0 million to purchase jeeps from its own funds.

The BB, however, said banks and non-bank financial institutions could spend up to Tk 8.5 million if they buy jeeps from the state-owned Pragati Industries Ltd., which assembles mainly Pajero brand.


[ First Page ] 2012-07-25