Major National Reinsurance covers not renewed exposing entire Country – Overseas Co’s holding out as Brokers illegitimately
Major National Insurance procurement programs have lapsed as at 31stDecember2017 and have not been extended after expiry, due to what can only be called irresponsible behavior, and the attempt to award tenders to illegitimate overseas companies. Theseillegal awards we learn are at unbelievably excessive premiums, compared to the renewal terms offered by the incumbent leader, and panel of underwriters.
These awards, at the written request to the incumbentStrategic Insurance Broker by the vigilantLine Ministry, also appreciating the represenations made with regard to the alleged fraud and corruption,are under appeal to the Presidential Appeals Board (PAB), Cabinet Approval Procurement Committee (CAPC) and the Ministerial Procurement committees (MPC) against the intent to award to the overseas companies operating illegitimately.
The National Procurement Guidelines rightfully provide that awards cannot be made pending the appeal, and it is very appropriate in instances like this where it is alleged that procurement guidelines are blatantly violated with intent to award at exorbitantly higher premiums, compared to the best bids.
However it is learnt that the state controlled entity NITF (National Insurance Trust Fund) has, with the approval of CAPC/MPC and cabinet approval for the 2017 rreinsurance programs, an automatic one-month plus extension from 31st December 2017 on a prorated basis with the incumbent panel of reinsurers who in turn have already agreed to renew. Surprisingly and obviously for male-fide reasons,that option which is with much cheaper premium,has not been exercised for the lapsed policies under consideration, exposing the avoidable massive risk for the industry, people and the country at large for theuninsured period.
It is important to note that in April 2017 too such a non extension due to what can only be seen as sheer irresponsibility and male-fide intent of the officials at the Fund, affected the much applauded worldwide National Natural Disaster Insurance Scheme (NNDIS), which lapsed and was not extended in similar circumstances. The NITF was entertaining options from, we learn, overseas illegitimate brokers, as they are doing now. Thisled to a situation of no reinsurance cover for the un-insured and the thousands of marginalized poor, when the unfortunate floods devastated the country for a second year in a row during May 22, 2017. Eventually the taxpayer had to foot the hefty bill in Billions of flood damage depriving the poor and the marginalized,who would have been entitled to and were deprived of much more deserving higher claims and benefits. The much deserved credit for the Yahapalnaya Government that introduced this novel insurance scheme too was tarnished.
In the meanwhile overseas Companies are acting and holding themselves out as insurance brokers, when they are clearly not authorized to do so. These companies are not Registered Insurance and Re Insurance Brokers in Sri Lanka, as required by the Regulation of Insurance Industry Act No.43 of 2000, industry sources said.
The said companies are not located in Sri Lanka nor have they the required license from the Insurance Regulatory Commission of Sri Lanka. All institutions seeking insurance broking services and covers should check their registration with the IRCSL and other regulatory bodies as required by law.
Industry sources say that what is quite clearly against the law is untenable, and that any lax enforcement in this regard would be detrimental to the industry and have seriousrepercussions. They say this would open the floodgates for many industry standards to be flouted, leading to an unregulated industry, whichwill in turn leading to fraudulent practice, corruption and chaos as demonstrated and becoming evident in this instant.
Meanwhile the IRCSL makes clear that there are mandatory requirements including adequate capital, ehical and competence offiers to register as an Insurance Broker, and failure tocomply and furnish the required information and documents for registration as a broker results in refusal of registration.
They also note that companies, which fail to register are prohibited from acting or holding themselves out as insurance brokers and the names of such companies will not be in the list of approved brokers.
