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INSURANCE SECTOR

Thrashed by politics, garment troubles

Sajjadur Rahman
Insurance companies have taken severe beatings in 2013 as a result of aggressive politics, fire accidents and labour unrest in garment factories.
"Our payments for claims have
increased several times in 2013. We have to bear the brunt of this violent politics," said Nasir A Chowdhury, adviser of Green Delta Insurance, a leading private insurer in the nonlife category.
The company has settled Tk 35 crore worth of claims in 2013, with
another Tk 125 crore of claims outstanding.
Reliance Insurance, another major insurer, has received claims on 70 cars which were either burnt or wrecked by pickets in 2013.
"We were forced to incur losses,” said Akhtar Ahmed, the company's
managing director.
Reliance, however, is somewhat fortunate, as motor vehicles account for only 30-35 percent of its total portfolio, as it can go as high up as 70 percent for some insurers, he added. "Fourth quarter business was not good due to the severe political turbulence. We have received many claims during the last few months of 2013," said a senior official of Pioneer Insurance, another prominent insurer, preferring not to be named.
Other than political activism, which was rampant in the closing months of the year, the sector was hit by several incidents of fire and labour unrest at garment factories.
Garment workers on the outskirts of Dhaka went on a destructive spree over their wage demands in the middle of last year, while the arson attack on Standard Garment on November 29 yielded claims of around Tk 500 crore.
The industry was also hit by the overall subdued nature of the economy arising due to
the political uncertainty: people are purchasing fewer cars and entrepreneurs are not taking up any new projects.
Amidst the downbeat environment, some insurers, however, witnessed a modest growth in their premium earnings.
The Pioneer official said they are yet to finalise the accounts for 2013, but the company's profit after tax was slightly over Tk 18 crore for the nine months till September 2013, up from 5.88 percent year-on-year.
Green Delta earned Tk 261 crore from premium last year, up from previous year's Tk 260 crore butTk39 crore short of 2013's target.
At present, there are 44 non-life insurance companies in the country, competing for premiums worth Tk 2,340 crore.