Continental's fire ins licence scrapped
The Insurance Development and Regulatory Authority (IDRA) suspended the fire insurance business of Continental Insurance Ltd for its failure to settle claims worth Tk 24.46 crore of a client.
The client, Khulna-based Jute Textile Mills, took a fire insurance policy with Continental Insurance in March 2016 and two months later was met with a fire incident.
The mill owner informed the insurer about the incident and submitted claims for compensation worth Tk 29 crore. But the insurer did not take the necessary steps to settle the claim, breaching insurance law.
It is mandatory for an insurance company to settle claims within 90 days of receipt of all supporting documents from the client, according to the Insurance Act 2010.
Subsequently in December 2016, the policyholder filed a complaint with the IDRA to solve the issue.
“The registration of fire insurance of Continental Insurance has been suspended due to disdaining customer's interest and failure to comply with the authority's instruction,” the regulator said in its letter to the company in June.
The suspension is for three months.
The IDRA also served a show-cause notice on Continental Insurance, asking it to explain within 30 days why its fire insurance registration should not be cancelled. “We found that the policyholder had paid the premium but the insurer did not settle the claim,” said Gokul Chand Das, member of the IDRA.
The IDRA held three hearings with all the related parties: the policyholder, the insurer and the surveyor.
After reviewing all the documents, the authorities found that the insurer had a pre-underwriting risk valuation survey by its own-appointed surveyor.
The surveyor had determined the insurance value of Tk 80.14 crore and set the premium of Tk 48.08 lakh for risk coverage, which Jute Textile Mills paid in full.
Despite having no snag at the client's end, the insurance company delayed the settlement.
The delay in claim settlement has affected the policyholder and also shed a negative light on the insurance industry, the IDRA said in its letter.
Contacted, Ataur Rahman, company secretary of Continental Insurance, told The Daily Star that the company was in talks with the IDRA about the suspension.
Continental Insurance's revenue in 2017 stood at Tk 59 crore, 52 percent -- or Tk 31 crore -- of which came from the fire insurance segment.
