Ismail Hossain
The insurance regulator has fined Takaful Islami Insurance Limited for breach of agent commission directive which allows maximum 15 per cent commission for agents of non-life insurance companies.

The Insurance Development and Regulatory Authority (IDRA) imposed the penalty of Tk 6,00,000 after a hearing held Thursday at its office in the city. The company has been fined under Kha subsection of section 130 and section 134 of Insurance Act 2010.

IDRA Chairman M. Shefaque Ahmed, Actuary, its members Naba Gopal Banik, Sayeed Ahmed Khan, Md. Nurul Islam Mollah, Md Fazlul Karim and the company officials including Managing Director (MD) Md. Zainul Huda were present at the hearing.

The insurance company has to pay Tk 5, 00,000 as penalty for committing breach in paying agent commission and its MD Md. Zainul Huda personally has to pay additional Tk 1, 00,000 for being the accomplice in the violation.

The Central Rating Committee in an investigation on May 15 found that the company paid agent commission at the rate of 40 per cent while they were allowed to pay not more than 15 per cent.

Apart from the penalty, Takaful Islami Insurance has to deposit additional paid agent commission of Tk 1, 62, 949 in the company's bank account and the money receipt and the bank deposit receipt will have to be sent to insurance regulator.

The non-life insurance company also has to deposit Tk 92,882 to the company account and repay the commission to the agent in account payee cheque.

The company has paid all the money to the agent in cash, which is clearly a violation of Insurance Act 2010, said an IDRA member.

The IDRA member said Takaful must send the entire repayment documents within seven days to the insurance regulator.

The Takaful MD said though he as well as the company is a victim of a conspiracy hatched by a company official they would comply with the IDRA verdict of the hearing.

"I am a relentless advocate of bringing transparency and order in the insurance industry and I always remain a law-abiding person for a healthy insurance industry," he said.

On April 11, the insurance regulator fixed the maximum rate of agent commission for non-life insurance companies at 15 per cent with immediate effect.

There was virtually no commission system in the general insurance firms until March, as the authority did not fix any commission rate. The earlier system of paying agency commission by the companies was scrapped after passing of the Insurance Act 2010 in the parliament.

IDRA in a circular said the country's 43 non-life insurance companies will have to pay their commission through account-payee cheques in favour of legalised agents.

However, the government-owned Sadharan Bima Corporation will remain outside of the purview of agent commission system.

Bangladesh Insurance Association (BIA) formed a 10-member task-force to monitor payment of agency commission by non-life insurers.

Takaful MD Md. Zainul Huda is also a member of the taskforce.