Alpha Islami Life Has Eaten Up Tk 90 Crore of Customers' Funds

Staff Correspondent: Alpha Islami Life Insurance has illegally paid development allowances and thereby misappropriated (eaten up) 90 crore 10 lakh taka of customers’ money. In its closing accounts, the company has stated that this money was paid to Financial Associates (FA), Unit Managers (UM) and Branch Managers (BM) under the names of monthly and quarterly development allowances.

Section 59(2) of the Insurance Act 2010 states that no person shall pay or agree to pay to any insurance agent, in respect of any life insurance policy effected in Bangladesh through an agent appointed by the issuer, any commission or other remuneration exceeding the prescribed percentage rate, and no insurance agent or person appointing an agent shall accept or agree to accept any such payment.

In other words, agents cannot be paid commission higher than the prescribed percentage rate, nor can any other form of remuneration be given under any other name.

Furthermore, according to Insurance Development and Regulatory Authority (IDRA) Circular No. Life-03(B)/2012, payment of development allowances or any other form of remuneration outside the prescribed rates of commission and incentives in a life insurance company is illegal.

Insurance experts say that the law clearly specifies in which heads and to what extent life insurance companies may incur expenditure. There is no scope to spend outside these heads. Even if such expenditure remains within an approved overall limit, it is still illegal. Spending customers’ premium money outside the law amounts to harming customers’ interests.

They explain that if these amounts had not been spent, the company’s life fund would have grown and the company’s financial strength would have increased. As a result, the bonus rates for customers in the future would also have been higher.

This picture of illegal expenditure has emerged from a review of the company’s year-end accounts from 2021 to 2024, which were themselves submitted to IDRA. However, the Insurance Development and Regulatory Authority (IDRA) has not even raised any question regarding this offence by the company.

Account of the 90 crore taka looted over four years

Investigation reveals that Alpha Islami Life issued an official circular titled “Sales Policy Memorandum” creating two special heads — “First Year Monthly Development Allowance (FA-BM)” and “First Year Quarterly Development Allowance (FA-BM)” — for paying salaries and allowances to development officers. These circulars were signed by the company’s Chairman Alamgir Shamsul Alamin and Chief Executive Officer Nure Al Siddiqui Abhi.

According to the information in the circulars, if an FA collects 20,000 taka in first-year premium in a month, he will receive 5,000 taka as development allowance in addition to the prescribed commission. If this premium amount is 2 lakh taka, 20,000 taka is paid as development allowance. For every subsequent 2 lakh taka of first-year premium, 9,000 taka is given as monthly development allowance.

In addition, Financial Associates are paid a further 7,000 taka as quarterly development allowance for every 1.5 to 2 lakh taka of first-year premium collected every three months. And if the first-year premium exceeds 10 lakh taka every three months, 25,000 taka is paid as quarterly development allowance.

In the same way, Unit Managers and Branch Managers are also paid monthly and quarterly development allowances. These development allowances are paid on the basis of first-year premium income and as an additional benefit over and above the prescribed commission — which is completely illegal under the law.

According to information as of 31 December, Alpha Islami Life has spent 90 crore 9 lakh 96 thousand 884 taka of customers’ money over four years under the name of development workers (FA-BM).

Of this, in 2024 alone the company spent 19 crore 59 lakh 43 thousand 975 taka — of which 17 crore 79 lakh 58 thousand taka was under the First Year Monthly Development Allowance (FA-BM) head and 1 crore 79 lakh 85 thousand 975 taka under the First Year Quarterly Development Allowance (FA-BM) head.

Earlier, in 2023, Alpha Islami Life spent 32 crore 8 lakh 2 thousand 467 taka under these two illegal heads. Of this, 28 crore 35 lakh 96 thousand 837 taka was under First Year Monthly Development Allowance (FA-BM) and 3 crore 72 lakh 5 thousand 630 taka under First Year Quarterly Development Allowance (FA-BM).

In 2022 as well, the company spent 26 crore 94 lakh 44 thousand 621 taka under the “First Year Monthly Development Allowance (FA-BM)” and “First Year Quarterly Development Allowance (FA-BM)” heads. Similarly, in 2021 the company spent 11 crore 48 lakh 5 thousand 821 taka under these two heads.

What Alpha Islami Life says about the illegal expenditure

When contacted regarding the alleged irregularities, Alpha Islami Life’s Chief Executive Officer Nure Alam Siddiqui Abhi did not comment directly and advised speaking to the company’s HR & Admin department.

Later, after repeated contacts, the company side stated that the information on payment of development allowances to agents has been submitted to IDRA. Therefore, whatever needs to be known should be ascertained from IDRA. The company has no statement of its own on this matter.

IDRA will take steps

When asked about the expenditure of 90 crore taka under two illegal heads in violation of the law, IDRA spokesperson Saifunnahar Sumi said that the authority will examine the matter thoroughly and take necessary steps.

At the same time, she thanked Insurance News BD on behalf of IDRA for bringing such a serious irregularity to the notice of the regulatory body.