The Insurance Development and Regulatory Authority has tightened immovable asset purchasing rules to check fraudulent activities by insurance companies in buying such assets, particularly land, an IDRA official told New Age on Wednesday. The insurance regulator this week issued separate letters to all the insurance companies in the light of its earlier directive issued in 2012 which asked the insurance
companies to get prior approval from the IDRA to purchase any immovable asset.
IDRA officials said that there were allegations against some insurance companies that the insurers embezzled insurance or life fund by overrating the immovable assets they procured.
‘The insurance regulator has made the move to prevent fraudulent business activities by the insurance companies,’ said IDRA member Md Quddus Khan.
‘If we can prevent such fraudulent activities by insurance companies, it will help to increase profitability of the companies and that will also help the companies to issue increased dividend as well,’ he said.
As land and property business are generating satisfactory revenue for the insurance companies, Quddus said, ‘We will not try to
refrain the companies from the business,’ he said.
As per the directive issued to all the 77 insurance companies operating in the country, the companies have to submit minuets of the board meeting on purchasing land, building or immovable assets, the chief executive’s certificate, whether any
director or sponsor is affiliated with the property that the company is going to buy.
The directive has also asked to submit untroubled certificate of the property, two assessment report including price, quantity and location by surveyors, source of fund for the procurement and purpose of purchasing the asset.
The insurance companies are also asked to submit a list of immovable assets of the company.
The insurance regulator in July 2012 had issued a directive which asked all the insurance companies to get prior approval from the IDRA to procure any immovable asset.
Interests of the policyholders of the life insurance companies are directly associated with the procurement of land and building, while interests of the policyholders of non-life insurance companies are also affiliated with the procurement of such assets, the IDRA directive said.
‘Excess investment in a single sector may lead the existence of an insurer to danger. That’s why insurance companies have to take prior approval from the regulator before
taking any such decision of procurement of land, building and immovable assets,’ it said.
-With New Age input
