Photo: Messenger
Fareast Islami Life Insurance Company Limited, a listed entity in the capital market, has reportedly failed to pay approximately Tk 2,280 crores in insurance claims designated for widows, disabled individuals, and the impoverished.
This revealing information has come to the fore upon scrutiny of the company's unaudited financial report for the fiscal year ending on 30 December 2023.
Fareast Islami Life Insurance Co. has acknowledged the issue, as confirmed by its Chairman, Sheikh Kabir Hossain.
In a statement to The Daily Messenger, he affirmed, "Upon our assumption of responsibilities, we encountered a higher volume of pending insurance claims. Our commitment to settling insurance claims takes precedence over managing premium funds. We are prepared to address this by liquidating assets if necessary, ensuring the rightful recipients receive their due compensation."
Observers within the sector emphasise that Far East Islami Life is among the country's oldest insurance companies. Having been listed in the capital market in 2005, the company once stood as a model within the insurance sector until 2013. Subsequently, with the takeover of the current board of directors led by SA Khaleq and Nazrul Islam, the company began to incur losses.
Nazrul Islam faced imprisonment in connection with embezzlement charges. However, currently, both Nazrul Islam and SA Khaleq, along with other officials, seem to be moving freely with considerable influence. The company is reportedly heading towards bankruptcy, attributed to the acquisition of hundreds of crores of taka. Disturbingly, the company finds itself in a precarious situation, with insurance claims reportedly doubling the value of its assets.
Mohammad Zubair, a resident of Bogura, has been pursuing an insurance claim for his elderly mother with Fareast Life for three years. Expressing his frustration, he informed The Daily Messenger that despite his continuous efforts and appeals to both the branch office and head office officials of the company, he has yet to receive the relatively modest insurance amount of Tk 27,717. Zubair lamented the lack of any concrete indication regarding when the claim would be fulfilled, adding to his distress and uncertainty.
Motasim Billah, a resident of Rangpur, expressed his concerns, stating, "My elder brother, uncle, and uncle's family collectively held a total of nine policies for eight years each. These policies matured in 2018, and for the past five years, I have been relentlessly pursuing the company officials to claim the 11 lakh taka entitled to us. Initially, when I approached an officer of the company, they redirected me to another officer. Now, they are stating that there are insufficient funds to honor the insurance claim. It's disheartening to hear that the company is unable to fulfill its commitment to pay the insurance claim amount."
Sanjeeda, a woman from Cumilla, voiced her frustration, stating, "After my husband's death, I invested in an 8-year policy, contemplating the future of my children. Over the years, I diligently paid monthly installments of 500 taka. The policy matured in 2019, yet for the past four years, I have been struggling to receive the entitled amount. The company owes me 61,000 taka, inclusive of profits. However, the reality is far from satisfactory, as I am still awaiting the disbursement of the meager 48,000 taka promised by the policy, leaving me deeply dissatisfied."
According to the company's records, the total premium income for the insurance company in 2023 amounted to Tk 520 crore. However, despite customers filing insurance claims totaling around 3,000 crore taka by the end of the outgoing year, only about 500 crores have been disbursed. Astonishingly, a significant sum of 2280 crore taka remains unpaid to the deserving customers. Notably, the list of beneficiaries whose insurance claims were settled in 2022 and 2023 lacks proper serialisation. There are concerns that the disbursement of insurance claims is being influenced by the personal directives of the Managing Director and members of the Board of Directors, rather than following a transparent and systematic process.
The company, despite having a substantial paid-up capital of 74 Crore 74 Lakh taka, has failed to distribute any dividends to shareholders since 2020. Presently, the company's assets stand at Tk 1060 crores. This raises concerns as the company appears to be indebted twice the amount of its assets to insurance customers.
The Insurance Development and Regulatory Authority (IDRA) have expressed dissatisfaction and disappointment with the insurance company. In response to this, they have officially communicated their concerns to the Chairman and Chief Executive Officer of the company, urging expedited action for the prompt settlement of insurance claims.
The Chairman of the company, Sheikh Kabir Hossain, acknowledged that the company is facing financial challenges due to numerous irregularities. Since taking over, efforts have been directed towards restoring the company's reputation. Despite working towards expedited payment of insurance claims, the financial condition remains weakened. The Chairman noted that the reduction in premium income from new policies has further complicated the situation, making it difficult to fulfill insurance claims in full.
Chairman of the Insurance Development and Regulatory Authority (IDRA), Mohammad Zainul Bari, expressed concerns over the declining confidence of the general public in the insurance sector, citing companies like Fareast, Sunlife, and Baira Life. Recognising the issue, the regulatory body is taking special measures to address the situation, exerting pressure on these companies to fulfill their commitments and promptly pay insurance claims.
Jahangir Alam, Director and Spokesperson of the regulatory agency, revealed that numerous customers have filed complaints about non-payment of policy funds. In response to these grievances, the regulatory authority has issued instructions to the companies, urging them to settle policies promptly upon expiration.
Messenger/Disha
