IDRA’s Tk 5 lakh fine: Symbolic penalty or strategic cover-up?

Staff Correspondent: The Insurance Development and Regulatory Authority (IDRA) has come under intense scrutiny for imposing only a Tk 5 lakh fine on Bangladesh National Insurance Company Limited (BNIC) despite evidence of misappropriating Tk 31 crore in premium funds. The regulator also failed to order the recovery of the embezzled amount or the associated VAT and tax, sparking question regarding its commitment to ensuring transparency in the insurance sector.

A special audit report revealed that BNIC’s 2022 financial statement recorded Tk 90.54 crore in premium income, while its bank accounts showed deposits of Tk 121.71 crore- leaving an unexplained gap of Tk 31.17 crore. Despite this glaring discrepancy, IDRA penalised the company with a token fine under Section 130 of the Insurance Act 2010, without demanding the return of the missing funds.

BNIC defended itself by claiming that the reported figures reflected net premiums based on policies, while bank deposits represented gross premiums including VAT, stamp duty and refunds. The company further said that advance premiums, previous year collections and dishonoured cheques- totaling Tk 20.82 crore- were also deposited. However, IDRA did not initiate any forensic audit or verification of these claims.

The audit also found that BNIC exceeded its approved management expense limit of Tk 30.70 crore by spending Tk 40.44 crore- an excess of Tk 9.73 crore. Yet again, IDRA imposed only a Tk 5 lakh fine without ordering further investigation.

In addition, the company was fined Tk 1 lakh for issuing 42 policies at non-tariff rates in violation of Section 17 of the Insurance Act and another Tk 1 lakh for delayed claim settlement- both later waived by IDRA.

Repeated attempt to reach IDRA for comment was unsuccessful.