Kathmandu. Bangladesh is preparing to scrap the provision of mandatory 50 per cent share of reinsurance by non-life insurers to domestic reinsurers.
The Department of Financial Institutions under the Ministry of Finance has proposed to amend the Insurance Act, 2019 and scrap the provision related to compulsory reinsurance share.
The Department has proposed an amendment to the Insurance Act, 2019 and scrapped the provision of Section 17 of the Act, which requires the non-life insurer to provide at least 50 percent of the reinsurance to the General Insurance Corporation.
The scrapping proposal will give non-life insurers the freedom to choose the reinsurer and remove the compulsion to mandatorily share the risk to the government-owned reinsurer.
Although it is mandatory to have a reinsurance company with international credentials to attract foreign investment in the projects operated in Bangladesh, due to the provisions of the Act, investors have been reluctant to buy insurance along with domestic reinsurers.
The state-owned reinsurer, General Insurance Corporation, has defended the existing provision, saying that the scrapping of the mandatory share provision would increase the cost of foreign currency for reinsurance and create uncertainty in the insurance sector.
Among the 54-point policy reforms made public to collect suggestions from stakeholders, the regulator has proposed amendments to some provisions of the Act and scrapping some of them.
The regulator has invited stakeholders to submit written suggestions on the proposal to amend the Act by November 29, according to the online edition of InsuranceNews202.
