IDRA Issues New Mandates for Fire Insurance Rates

The Insurance Development and Regulatory Authority (IDRA) has issued a rigorous set of eight directives aimed at non-life insurance companies regarding the approval of Fire Package Rates. In a formal communication released on Wednesday, 24 December, the regulator expressed concerns that the submission of applications lacking necessary documentation or failing to adhere to established guidelines has been severely hindering its operational efficiency.

The IDRA’s letter highlighted that several non-life insurers have been neglecting the specific framework laid out in Circular No. F-122/2010 and Circular No. 88/2022. These oversights have led to “unwanted complexities” during the verification and approval stages. To streamline future proceedings, the regulator has now made it mandatory for all non-life insurers to provide comprehensive data and supporting paperwork in strict accordance with the updated protocol.

The Eight Mandatory Directives

Insurance providers must ensure that every application for Fire Package Rate approval strictly satisfies the following requirements:

Full Circular Compliance: All data must be submitted in line with Non-Life Circular No. F-122/2010.

Adherence to Guidelines: Companies must strictly follow the Package Rate Guidelines outlined in Item 23 of Non-Life Circular No. 88/2022.

Sum Insured Breakdown: A detailed explanation of the ‘Sum Insured’ must be provided in a separate annexure.

Reinsurance Verification: Applications must include a letter of recognition from the Sadharan Bima Corporation (SBC) for local reinsurance and a Facultative (Fac.) Acceptance Slip for overseas reinsurance.

Calculation Transparency: The calculation sheet for package rates must explicitly cite the relevant tariff pages.

Electrical Clauses: Documentation must clearly specify Electrical Clause-B alongside the respective value or Sum Insured.

Policy Schedules: A formal Fire Policy Schedule must be attached to every submission.

Average Rate Precision: For average rate calculations, both the Sum Insured and the corresponding tariff rate pages must be clearly identified.

Summary of Regulatory Requirements

The directive, signed by Monira Begum, Executive Director (Non-Life) of IDRA and Member Secretary of the CRC, stipulates that these measures take effect immediately. The regulator has warned that any future applications failing to meet these criteria will face significant delays or outright rejection. This move is seen as a major step towards digitising and standardising the non-life insurance sector in Bangladesh, ensuring greater accountability and transparency in premium calculations.