The government has restored the operating licence of Standard Insurance Limited more than 15 months after its revoking by the insurance regulator.
The suspension was imposed following company's failure to comply with a regulatory requirement -- mandatory re-insurance coverage against three policies valued Tk 463 million.
The Bank and Financial Institutions Division (BFID) in an order issued Monday said that the directive of the Insurance Development and Regulatory Authority (IDRA) cancelling the licence of the company will now stand null and void.
The IDRA had first suspended the licence of the privately-owned non-life insurance company for an interim period in June last year, before cancelling the licence finally on November 15 in the same year. The company had requested the regulator to review the case -- but was rejected.
As a last resort, they submitted an appeal to the government as per a provision of the Insurance Act of 2010 to get back the operating licence. In response, the BFID organised a meeting with IDRA and Standard Insurance.
The official order did not make it clear on what ground the licence was restored, but an official requesting anonymity said the tripartite meeting might have considered the interest of the share investors, company's future and government revenue as the company mentioned in the appeal.
"We've received the order yesterday (October 17)," the company chairman, HTM Quader Newaz, told the FE Tuesday. He said the company would start its business in full swing complying with the regulatory requirements.
Meanwhile, the share price of the company rose 9.6 per cent to Tk 17.1 at the bourses Tuesday as the latest development was posted on the websites of the bourses in the morning.
The DSE news, however, suggested that the licence was finally cancelled on November 15 last year. It added that the government has accepted the company's appeal and restored the licence.
The non-compliance of mandatory re-insurance by the company surfaced in 2013, following a devastating fire incident at Kazipur Fashions -- an enterprise of the same business group (Standard Group). The chairman of the insurance company also owns the fire-ravaged garment factory.
The company did not reinsure parts of the fire insurance coverage, according to the order issued by IDRA, a copy of which was obtained by The Financial Express (FE). It said Kazipur Fashions was insured with fire coverage by the Standard Insurance on August 8, 2013.
The value of the coverage was Tk 490 million, but later it was increased by Tk 110 million, making a total coverage of Tk 600 million. The insurance company kept Tk 5.0 million as retention money.
IDRA conducted a probe into allegations of lack of transparency in the company's insurance coverage and claims.
The investigation found that Standard Insurance reinsured Tk 250 million with the state-owned Sadharan Bima Corporation under surplus agreement while provisioning some more fund as per the regulations. But Tk 110 million kept outside the purview of reinsurance.
The company also did similar violation in case of Tulgaon Fashions in 2013 - it did not reinsure Tk 8.35 million.
In another case, the company did not reinsure Tk 345 million out of the insurance coverage of International Trading Services in 2013.
In a reply to IDRA, Standard Insurance admitted the violation and said those were considered as 'good risk' and, for this reason, those were kept outside the reinsurance.
The company was incorporated as a public limited company on November 03, 1999 and obtained registration from the Controller of Insurance on December 23, 1999.
The authorised capital of the company is Tk. 1,000 million consisting of 100,000,000 ordinary shares of Tk. 10 each. The sponsor /subscribers have already contributed to the paid up capital of Tk. 22.95 million.