IDRA initiates first joint audit of insurers

The Insurance Development and Regulatory Authority (IDRA) has initiated a first-ever joint special audit involving four regulatory bodies to ensure transparency and accountability in the insurance sector. 

To implement the move, IDRA, Bangladesh Bank, the National Board of Revenue (NBR) and the Bangladesh Securities and Exchange Commission (BSEC) have coordinated to formulate a draft Terms of Reference.

Under the initiative, the regulators will simultaneously scrutinise insurance companies' financial statements, bank accounts, investments, premium collections, claim settlements and tax and VAT-related information. The proposal initially covers data from the last five fiscal years, with provisions to extend or shorten the audit timeframe if necessary.

Concerned stakeholders noted that separate audits often fail to provide a complete picture because insurers' financial activities fall under multiple regulatory jurisdictions. On the other hand, a coordinated audit will make it much easier to detect financial irregularities, data inconsistencies, fund misappropriation and potential fraud.

Reports indicate that at least a dozen insurance companies have been attempting to bypass regulatory bodies to conceal financial irregularities, data discrepancies, fund misappropriation and fraudulent activities.

Speaking to UNB on condition of anonymity, a top IDRA member said the joint special audit will help prevent companies from covering up fraudulent incidents. He added that the initiative will make it easier to penalise insurers attempting to conceal financial irregularities and data inconsistencies.

Source: UNB