As per the rule of the regulatory board, non-life insurance companies in Bangladesh have finally agreed not to give more than 15% commission to agents. After Bangladesh Insurance Association (BIA), a forum of sponsors, warned its members of non-violation of the decision, the development comes. “We will not allow any company to go beyond 15 percent,” said Sheikh Kabir Hossain, president of the BIA.
The IRDA, Bangladesh Bank and all insurers have agreed to work together to implement the commission rate set by the regulator in 2012. The decision must be followed for the sake of the industry, said Mahbubur Rahman, chairman of Eastland Insurance and president of the International Chamber of Commerce-Bangladesh. Some of the companies offer up to 60% of the premium as commission to get business, which is impacting the industry adversely, according to the industry experts. In response to that, the IDRA issued a notice seven years ago asking insurers to follow its order on agent’s commission.
When compliant insurers had tried to abide by the IDRA rule, errant companies grabbed the business by giving exorbitant commission. The financial health of many insurance companies is wobbly due to the payment of high commission, said Nasir Uddin Ahmed, executive member of the BIA. Asked how the violators would be detected, the BIA president said all the insurers will be extra cautious and if anyone is found to be giving more commission they will be easily identified.
