The post has reference to a circular of Sadharan Bima Corporation (SBC), the only state-owned insurance and reinsurance company in Bangladesh.
Circular on the Regulations of Insuring Public Property
Solely with Shadharan Bima Corporation
Shadharan Bima Corporation is a government organization under Bank and Financial Institution Division of the “Ministry of Finance” of the Peoples’ Republic of Bangladesh. As per Insurance Acts of Bangladesh and the subsequent Memorandum of Agreement (MOA) made between Shadharan Bima Corporation and Private Non-life insurance companies, the insurance for Public Property is to be underwritten solely by Shadharan Bima Corporation. In accordance with the Insurance Ordinance no. L/1 of 1984 in Substitution of Section 23, Act VI of 1973, the Public Property clarifies as follows:
“23. Public Property to be insured with the Sadharan Bima Corporation only:-
(1) All insurance business relating to any public property or to any risk or Liability appertaining to any public property shall be placed with Sadharan Bima Corporation and with no other insurer.
(2) Any policy of insurance taken or issued in connection of sub-section 23(1) shall be void: Provided that any claim for loss, damage, compensation or referred of premium arising out of, or relating to, such policy shall be binding on the insurer.
(3) In this Section “Public Property” means:-
(a) any property movable or immovable which belongs to, or the protection of which is the legal responsibility of –
(i) The Government or a local authority; or
(ii) Any company, firm, undertaking, institution, organization or other establishment which is managed or controlled by the Government or a local authority or in which the Government, by itself or jointly with a local authority or company managed or controlled by it holds controlling financial share or interest or which is specified by the Government for the purpose of this section; and
(b) a project financed out of an external loan or with external aid until it reaches-
(i) in the case of an industrial project, the stage at which it is capable of commencing normal production; and
(ii) in the case of any other project, the stage at which it is capable of being put to the use for which it is intended.”
Thereafter, in 1984 after the establishment of the private insurance companies, the below mentioned regulations in place of the Sub-section (I) of Section-23 of Insurance Corporation (Amendment Act), have been circulated in 1990 in favor of insuring public property.
“(1) Fifty percent of all insurance business relating to any public property or to any risk or liability appertaining to any public property shall be placed with the Sadharan Bima Corporation and the remaining fifty percent of such business may be placed either with that Corporation or with any other insurer in Bangladesh”.
Nonetheless, to bring market discipline in Bangladesh Insurance Market, Ministry of Commerce has issued a letter # BA-BI-2/1(16)/89(Part)/114 dated 21-04-1990 in accordance with the request of the Bangladesh Insurance Association and then a MOA was made between SBC & Private Non-life Insurance Companies which states as follows:
1. None other than Sadharan Bima Corporation shall underwrite any general insurance business relating to any Public Property or to any risk or liability appertaining to any Public Property.
2. All accounts of concerned signatory/signatories of the 2nd party who is/are found to have underwritten any such business in violation of the terms and modalities of the said agreement shall be kept suspended until the matter is finally resolved.
Therefore, there is the apparent recommendation for insuring Public Property solely with Shadharan Bima Corporation as per the exiting Insurance Acts and the abovementioned MOA with the non-life insurance companies. Nevertheless; some private non-life insurance companies have been issuing Insurance Policy in favor of the Public Property which is the complete violation of the existing rules and regulations.
So, all private non-life insurance companies are hereby requested not to issue insurance policies in favor of the public properties and all concerned to insure public property solely with Shadharan Bima Corporation in accordance with the existing Insurance Act and Regulations.
Shadharan Bima Corporation, Dhaka
Mr. Abdul has been in insurance sector of Bangladesh for a decade. He is an Associate Member (ACII) of Chartered Insurance Institute of London.