BIA Meeting on 3 November Regarding CFO Appointments in Insurance Companies

Staff Correspondent: The Bangladesh Insurance Association (BIA) has called a meeting on the implementation of IDRA’s directive regarding the appointment of qualified and professional Chief Financial Officers (CFOs) in insurance companies. The joint virtual meeting of the Life and Non-Life Technical Sub-Committees will be held at 3:30 pm next Tuesday (3 November).

This information was announced in a recent notice signed by BIA Secretary Md. Omar Faruk.

According to relevant sources, the Insurance Development and Regulatory Authority (IDRA) has issued a directive to ensure the appointment of qualified CFOs in insurance companies. This joint meeting has been organised mainly in light of that IDRA directive, where detailed discussions and decisions will be taken on the matter. The notice also states that there will be scope for discussion on miscellaneous issues in the meeting.

BIA has requested all members of the Life and Non-Life Technical Sub-Committees to join the virtual meeting on time and participate. This meeting notice has already been communicated to the BIA President, First Vice-President, Vice-President and all members of the Executive Committee.

It is to be noted that under Sections 80, 81 and 124–127 of the Insurance Act 2010, IDRA only has jurisdiction over the appointment or approval of certain intermediaries such as CEOs, advisors, agents and surveyors. Although the requirement for regulatory approval for the appointment of Chief Financial Officers (CFOs) was included in the draft proposal for amendment of the law, this circular has been issued by bypassing the law before it was finalised.

Sector stakeholders say that the directive has not taken into account the financial capacity and actual needs of all companies. It may not be financially possible for all companies to appoint individuals with Chartered Accountant (CA) or equivalent higher educational and professional qualifications.

In many insurance companies, experienced individuals have been serving in the CFO position for 10–20 years. Due to the new rules, these skilled and experienced professionals will have to be excluded because they lack the educational certificates, which will create a major obstacle in retaining skilled manpower in this sector.

At the same time, if any existing experienced CFO has to be terminated or excluded to fulfil the conditions of the circular, the concerned insurance company will face the burden of substantial financial compensation or liability.

In addition, according to the circular, the process of appointing such highly qualified CFOs must be completed by 31 December. Finding suitable candidates within such a short time is difficult, and they believe it is also questionable whether a newly appointed CFO will be able to properly prepare the company’s annual financial report at the last moment of the year.