The New Nation - Internet Edition

Syful Islam

Thousands of insurance claims remain unsettled for years as the insurance companies do not pay any heed to the existing rules and the authorities concerned are careless to force those.

"Insured has to go to door to door year after year to get the insurance claim settled despite the companies are earning huge sum each year," said a high official of the Department of Insurance.

"Each year the 62 insurance companies do business of more than Tk 15,000 crore. But the companies are reluctant to settle insurance claim of only Tk 2 to 3 crore. We cannot take appropriate measures against the companies due to lack of adequate manpower, he said.

According to the rules, the insurer has to settle all the claims within three months. But most of the claims remain unsettled year after year. Each company sends a quarterly report to the Department of Insurance mentioning the position of insurance claims but in most cases the number of settled claims remain lower.

The Federal Insurance Company Ltd has settled only 74 claims between January and March 2008 out of unsettled 287 claims. Till March 2008, the company has 213 unsettled cases of worth Tk 3 crore.

Statistics say more than 50 claims of the Federal Insurance Company remains unsettled for six months, 48 cases unsettled for one year and 54 cases unsettled for more than one year.

Informed sources said the insurance companies misappropriate huge funds showing many reasons. Directors pocket huge sumon different occasions but hardly agree to settle insurance claims.

The government earlier had decided to appoint an Insurance Ombudsman to speed-up the disputes but yet to take any final decision in this regard.

Meanwhile, a good number of disputes between the insurer and the insured remains pending at the office of the Chief Controller of Insurance (CCI) for settlement.

The Department of Insurance, regulator of the sector, is lacking the power to compel the insurance companies to implement its order in this regard. Most of the insurance companies in many of the cases flout directives of the CCI office to settle disputes.

At present, in this region, the post of Insurance Ombudsman exists in India and Sri Lanka and they are working successfully to settle the claims and disputes.

A regional meeting of South Asian Insurance Regulatory Forum (SAIRF) held in Nepal held earlier reached a consensus that dispute settlement between the insurer and the insured should be handled by the Insurance Ombudsman. The decision of Ombudsman would be binding on the insurer but if he is not happy with the decision he is free to go to the higher court.

Experts said no effective punitive actions are taken against the insurance companies disobeying to follow the directives of the office of the CCI.

"Trade organisations are also the barrier in this regard and insurance Ombudsman with appropriate power in hand is needed to control them," experts said.