Northern Islami Insurance: Rising premium income fails to boost profit

Staff Correspondent: Despite steady growth in gross premium income, Northern Islami Insurance Limited has struggled to maintain consistent profitability- raising concern about the accuracy and transparency of its financial reporting.

According to the company’s audited financial statement, gross premium income rose from Tk 35.15 crore in 2015 to Tk 100.40 crore in 2023. However, during the same period, underwriting profit- the company’s core measure of operational efficiency- declined from Tk 13.10 crore to Tk 10.87 crore. In percentage terms, underwriting profit fell from 37.27 percent to just 10.83 percent of total premium income, marking a steep 70 percent drop in margin over eight years.

The company attributes this decline to increased liabilities and higher claim settlements resulting from expanded business operations. Northern Islami’s Assistant Vice President and Acting Company Secretary Bidyut Kumar Samadder said that larger policy volumes raise exposure to risk, which in turn increases claims and reduces profit margins. He also highligted that the company’s asset base grew because regulatory reserves are counted as assets.

However, Insurance News BD’s investigation found inconsistencies in this explanation. The insurer’s financial data shows that in 2023, net claims payments were actually negative Tk 2.55 crore- suggesting recoveries or accounting adjustments- whereas in 2015, net claims stood at Tk 3.50 crore. The claim settlement ratio thus fell from 10.05 percent of gross premium to a negative 2.54 percent, contradicting the claim of rising liabilities.

Despite the weakening underwriting performance, the company’s total assets increased from Tk 111.07 crore in 2015 to Tk 264.34 crore in 2023- an overall rise of nearly 138 percent. Over the same period, net profit after tax totaled Tk 60.78 crore.

Industry analysts say such discrepancies often point to deeper issues in non-life insurers’ underwriting discipline and accounting practices. They warn that when underwriting profits lag behind premium growth, it may reflect flawed pricing strategies or mismanagement of risk.

The Insurance Development and Regulatory Authority’s spokesperson, Saifunnahar Sumi, said the regulator will examine whether irregularities exist in Northern Islami’s underwriting profit calculations and take legal action if necessary.

Analysts said that robust regulatory oversight, transparent claim disclosures and independent audits are vital to restore confidence and ensure answerability within the country’s non-life insurance sector.