New provisions included and changes brought in Current Insurance Act
The insurance Act has not only brought the new additions but also has brought some eye-catching changes in some significant areas that existed in the previous insurance act. The changes brought by the insurance act 2010 are discussed shortly below –
- Capital Requirements: An insurer transacting life insurance business would be required to have a minimum paid up capital of TK.300 million while the minimum paid-up capital for non-profit insurer would be TK.400 million.
- Spread of business in rural areas: Provision has been made to induce insurers to undertake such percentage of his business in the rural areas or in social sectors as may be specified by the authority. This provision, would encourage savings among the people in the rural areas and social sectors on the one hand, and provide financial security and provide financial security to the insurer on the other.
- Reinsurance Abroad:
The present mandatory provision for reinsurance of general insurance with the stated-owned Sadharon Bima Corporation (SBC) has been relaxed. An insurer may reinsurer with any other insurer inside or outside Bangladesh.
- Penalty: Under the new insurance law, the maximum penalty for any violation will be TK 10 lakh in fine, while the minimum fine will be TK. 50,000 the violation continues an additional fine of TK. 5000 per day will be imposed.
- Provision for foreign Investment: With a view to attracting foreign investment in the insurance sector in Bangladesh, foreign investors would be allowed to hold or subscribe to the share of an insurance company up to a described maximum.