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The government has created scope for life insurance companies to join hands with it in development work through investing in infrastructure bonds.
Officials concerned said a new regulation to this end has also allowed the insurers to invest in immovable assets in city corporation and municipal areas.
The Insurance Development and Regulatory Authority (IDRA) issued the ‘Insurance (Life insurers asset investment) Regulations-2019’, dated November 19, with those provisions.
The regulation stipulates that a life insurer must invest at least 30 per cent of its assets in government securities to ensure its contribution to development.
It also mandates that a company must invest assets, equivalent to its liabilities, in Bangladesh.
A life firm would be able to invest its remaining assets outside Bangladesh with government approval.
Earlier, such investment areas were not clearly defined in the rules issued in 1958, officials said.
An insurer can invest 15 per cent of its remaining assets in government’s infrastructure and other bonds, 5.0 per cent in debenture of any companies.
It can also invest 10 per cent in the Securities and Exchange Commission-issued debenture, 10 per cent of its paid-up capital or 5.0 per of total assets in bourse-listed shares.
A company will be able to deposit the maximum 60 per cent of its remaining assets in scheduled banks.
According to IDRA officials, the majority of life and non-life insurance companies earlier used to keep most of their funds in scheduled banks as FDR.
As per the new regulations, a life insurer will be able to invest up to 20 per cent of its assets in the mutual funds and unit funds.
A company will be able to invest 10 per cent of its assets in the fixed deposit schemes in the non-banking financial institutions under certain conditions.
It can invest 20 per cent of its assets in immovable assets in a city corporation or municipal area.
An insurer will also be able to invest 10 per cent of assets in its subsidiary companies.
IDRA has determined liabilities of a company like liabilities of insurance policy as per actuarial evaluation, required funds to pay back to policyholders, proposed and unpaid dividend and policy bonus, payable tax, payable to re-insurers, owed money except paid-up capital, bad loan and depreciation fund.
However, intangible assets, furniture, good image, patent and some other issues will not be considered as liabilities of a life insurer.
Each insurer will have to submit investment return to IDRA quarterly within 21 days of the last working day of March, June and September, the regulations said.
For non-insurance companies having head office outside Bangladesh, life insurers will get 30 days for submission of returns instead of 21 days.
The life firms will have to submit an investment certificate or declaration in a prescribed format of IDRA with the details of their sector wise investment.
Seeking anonymity, a senior IDRA official said there was no such prescribed format for declaring investment earlier.
IDRA, for the first time, has created scope for a life insurer to invest in government’s development work through infrastructure bond, he added.
It can inspect assets of a firm and take punitive action in case of violation of the regulations.
(FE)
