Inspection and Inspection Manual

1. Background

In the era of globalization, the insurance sector plays an important role in the economic development
of the country along with the elimination of unemployment. There are two types of insurance
services available from the insurance sector. Insurance services are provided to customers by
accepting certain risks of assets from one life insurance company and another non-life insurance
company.

Accepting the risk of loss of human life in return for a fixed amount is the main function of life
insurance companies and on the other hand, taking the risk of loss of property is the main function
of non-life insurance companies. So in the words of Mowbray and Blanchard insurance is "Insurance
is a promise by an insurer to an insured of protection and/or service".

Life and non-life companies in Bangladesh conduct insurance business through various branch offices
established at the district and upazila levels including all the divisional cities of the country. After
independence the insurance sector was neglected. As a result, there was no discipline as the
insurance sector was not managed in compliance with the provisions of the Insurance Act.

Aiming to bring order to the insurance sector and bring the insurance laws in line with the modern
world, the government enacted the new Insurance Act 2010, repealing the Insurance Act, 1938 and
simultaneously passing the Insurance Development and Regulatory Authority Act 2010, abolishing
the Directorate of Insurance on 26 January 2011 ,the Insurance Development and Regulatory
Authority is constituted with a chairman and four members.

The role of the insurance industry aimed at supervising the business, safeguarding the interests of
insurance policy customers and beneficiaries under the policy and systematic development and
regulation of the insurance industry would not be possible without regular inspection by the
authorities.

2. Inspection

An inspection is a formal examination or review. The English word for inspection is Inspection, which
is derived from Latin 'Inspectionem' (meaning 'a looking into') and French 'Inspeccion' (meaning
inspection, examination). Inspection is of two types. One is on-site inspection and the other is off-site
inspection.

On-Site Inspection: On-Site Inspection is the name of conducting inspection activities directly at the
place concerned with the subject of inspection. This type of inspection is conducted by the
supervisory authority to ensure the protection of the interests of the insurance policy customers and
beneficiaries under the policy by properly complying with the rules and regulations of the insurance
law in the business management of an insurance company.

Off-Site Inspection: Off-site inspection is a process of reviewing and analyzing various reports,
information and data provided by the insurance company.

In the inspection, the authorities should ensure that the insurance companies are able to fulfill their
responsibilities and duties under all reasonable conditions to protect the interests of the insurance
customers. Analyzing and evaluating/examining the various reports, returns and statistics of
insurance companies on a regular basis from which the confidence of insurance customers and
stakeholders can be increased by bringing transparency and accountability in the management

of insurance companies by taking realistic action against their mistakes or errors or irregularities and
violations of law.

3. Purpose of inspection

The purpose of on-site or off-site inspection of insurance institutions is to:

(1) To check whether the insurance company is properly managed in compliance with the provisions
of the Insurance Act 2010 and the relevant rules and regulations and the directions of the authorities
from time to time;

(2) To check whether the accounts relating to the interests of insurance customers are properly
maintained; and section 11, 23, 24, 26, 30, 31, 32, 34, 35, 41, 43, 44, 58, 59, 60, 61, 62, 63, 64, 71,
72, 74, 75, 76, 78, 79, 80, 81, 82, 83, 84, 85, 93, 124, 125, of the Insurance Act 2010 should be
checked by the insurer to assess compliance with the provisions of the Act;

(3) Monitoring and evaluation of premium collection and bank deposit procedures from insurance
customers;

(8) Monitoring and evaluation of management structure including financial facilities of insurance
institutions;

(5) Internal audit and regulatory evaluation of insurance institutions;

(6) Evaluation of service delivery methods from insurance companies to insurance customers;

(7) Assessment of insurance claims management;

(8) Assessment of risk management;

(9) Whether the conditions relating to capital and shareholding in section 21 of the Insurance Act
2010 have been fulfilled; Assessment of the maintenance and control of accounts in insurance
companies as per Sections 26 and 27 of the Insurance Act, 2010;

(10) Monitoring of risk assessment and financial underwriting by underwriting to protect the
interests of insurance customers;

(11) Observation of methods of reducing insurance risk through reinsurance and settlement of
accounts;

(12) To monitor and evaluate whether the distribution channels used in collecting the insurer's

business have complied with the provisions of Section 124, Section 125 and Section 126 of the
Insurance Act 2010; (Appendix – 1)

(13) Assessment of asset and liability management;

(14) Examining investment accounts of insurance institutions and evaluating investment policies;

(15) Assessment of solvency margin management;

(16) Evaluation of financial policies of insurance institutions;

(17) Monitoring and evaluating the comparative picture of the actual management costs and the
approved cost limits of insurance institutions;

(18) Monitoring and evaluation of the constitution of the Board of Directors of insurance institutions
and its activities;

(19) Monitor and evaluate the timely and proper payment of various insurance claims;

(20) Regarding compliance with mandatory activities/reports/filing of returns under the

provisions of Insurance Act 2010, Companies Act 1994, Income Tax Ordinance 1984 and Value Added
Tax Act 1991;

(21) Monitoring the operations of branch offices of insurance institutions at the field level;

(22) Evaluation of information relating to marketing of insurance plans/policies;

(23) Monitoring the maturity rate of life insurance policies and policy revival process;

(24) Observing compliance with internal policies aimed at conducting the business of the insurance

company (eg, employment rules for officers and employees, procurement manuals, agent rules,
internal audit manuals, accounting manuals, training manuals, policies for opening new branch
offices, policies related to management expenses, etc.) ;

(25) Monitoring of information storage through computer technology of the insurance institution and
the necessary reports from the stored data base;

(26) Monitoring various grievance redressal activities of insurance customers and field workers;

(27) To check whether timely and correct information is sent to insurance customers, shareholders
and regulatory authorities as per the provisions of law; And

(28) To check whether the business is conducted in compliance with insurance laws and regulations
by examining the information, data, reports and returns filed by the insurance company.

4. Legal Powers and Scope of Inspection:

In accordance with the provisions stated in Section 49 of the Insurance Act 2010, the authorities may
inspect the books, accounts and transactions of the insurance company or its branch office from time
to time. As per section 48 of the Act inspectors may inspect the operations of the insurance company
for the purpose of investigation if any need arises.

As a regulator of insurance companies IDRA has jurisdiction to monitor filing of annual returns to
RJSC as per the provisions of the Companies Act 1994, deduction of tax at source as per the
provisions of Income Tax Ordinance 1984 and payment of annual income tax of the company,
deduction of tax at source as per the provisions of Value Added Tax 1991 and tax payable on
insurance services Deposits and annual Musak returns, use of insurance stamps on insurance
documents under the Stamp Act 1899 and and to inspect the payment of levies imposed by the
Government or authorities from time to time.

Moreover, more importance should be given to the following issues for the benefit of insurance
customers during the visit:

(1) conduct the business of the insurance institution in accordance with the provisions of the
Insurance Act;
(2) the percentage of business procurement costs;

(3) management expense rates;

(4) the ratio of employment of agents and employers of agents in the case of life insurance;

(5) Agent's reality check;

(6) Investment rate,

(7) rate of return on investment;

(8) ability to pay insurance claims;

(9) risk sharing with reinsurance;

(10) assumption of risk without premium;

(11) The insurance company in due course after the agent has collected the cash premium from the
insurance customer

Not paying the deposit as;

(12) payment of commissions outside the banking channel;

(13) Transfer of life insurance policy from one institution to another through an agent; And

(14) Finding out the cause of default in life insurance policy and recommending necessary action.

It should be noted that most of the life insurance activities in Bangladesh are done through service
cell or service center or zonal office, FPR (Fast Premium Receipt) is issued in case of new policy only
after collecting the premium and the policy renewal work is done from the head office along with the
remaining policy papers. Only policy proposal register, DCS, DES, bank statement copy, commission
register, PR pass book and claim executive receipt register are kept in service cell or service center
(branch office) of life insurance. Accounts along with vouchers of all expenses are sent to head office.
Similarly after issue of non-life insurance premium receipt cover note and issue of policy , remaining
work of policy are conducted from the head office. In non-life insurance branch offices, receipt book,
Muri account, premium collection account register, bank deposit register, policy register are kept.

5. Inspection team formation process

For the purpose of verifying the authenticity of the information and complaints received from
various sources from time to time to the authority and based on the information regarding the
irregularities/violations of law revealed in the review of the information, returns and reports of the
insurance institutions submitted to the Insurance Development and Regulatory Authority and 15(a)
of the Insurance Development and Regulatory Authority Act 2010 ) under the powers of Section 49
of the Insurance Act, 2010, the Authority shall constitute an inspection team consisting of the
required number of officers under the supervision of a supervisor officer and headed by a team
leader for inspection as a regular work for the purpose of regulation of insurance and reinsurance
business related institutions. The inspection team will visit the head office and branch office of the
insurance company. They can also discuss with stakeholders if necessary. At the time of inspection,
the provisions of the
Insurance Act and all relevant circulars and instructions of the authorities should be followed. The
Inspection and Inspection Wing of the Law Department of the Authority provides necessary
administrative support for the smooth conduct of inspection work .

6. Responsibilities and duties of inspection team

The inspection team will start work according to the plan given to them so that they can complete
the inspection work

within the time specified by the authority and submit the report to the supervisor officer.
Responsibilities

and duties of inspection team during inspection are as follows:

(1) Inspection of the books, accounts and transactions maintained by the insurance institutions
without prior notice, on the basis

of complaints or information given to the authorities, suddenly appearing at their head office or
branch office.

will do;

(2)

The inspection team shall visit the insurance company for verification of authenticity on the basis of
demand

to provide information, data and documents prior to the inspection.

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6. Responsibilities and duties of inspection team

The inspection team will start work according to the plan given to them so that they can complete
the inspection work

within the time specified by the authority and submit the report to the supervisor officer.
Responsibilities

and duties of inspection team during inspection are as follows:

(1) inspect the books, accounts and transactions maintained by the insurance institutions without
prior notice, on the basis

of complaints or information given to the authorities, suddenly appearing at their head office or
branch

office;

(2) The inspection team shall visit the insurance company for verification of authenticity on the basis
of demand

to provide information, data and documents prior to the inspection;

(3) contact the concerned banks, insurance customers or stakeholders for verification of information,
data or

documents collected by the inspection team;

(4) The inspection team shall carry out the inspection by reviewing and analyzing the various data
and reports

submitted to the authority by the insurance company;

(5) the inspection team shall carry out inspection on the basis of any complaint;

(6) After completing the inspection work, the team leader report of the inspection team shall be

prepared and submitted to the appropriate authority after review by the supervisor officer in

accordance with the attached report.

7. Code of Conduct for Visitors

The inspection team shall adhere to the following code of conduct:

(1) Members of the inspection team have a statutory duty obligation as representatives of the
authority;

(2) maintain the highest professional standards in all dealings with insurance company officials;

(3) the conduct of the members of the inspection team shall not reflect any selfishness of arrogance
or authority;

(4) No bias shall be made in inspection work;

(5) All rules given by the authorities shall be strictly followed;

(6) Team members must maintain ethics in inspection work; (7)

No comment shall be made on any conflicting matter without consultation with the supervising
officer;

(8) Any sensitive decision or event of the authority shall not be disclosed to the insurance company
or

any comment shall be made;

The authorities must maintain confidentiality;

(9)

(10) shall not involve themselves in any work related to the interests of insurance institutions;

(11) No unethical benefit shall be collected from the insurance company in private practice;

(12) The inspection team should have a working mindset aimed at assisting the development of
insurance institutions;

(13) No information collected during inspection shall be given to any print media or journalist.
8. Inspection plan

(a) A plan for the proper conduct of the work of the inspection team taking into account the
following matters:

will formulate

1. purpose of inspection;

2. Scope of Inspection:

3. sampling and verification;

4. inspection procedures and controls;

5. Examination time period;

6. members of the inspection team;

(b) In preparing the inspection plan the team leader shall consider the following points:

(1) In case of head office the plan shall be uniform and in case of branch office the plan shall be

other types;

(2) one type of plan in the case of life insurance companies and another type of plan in the case of
non-life

insurance companies;

(3) Size and functional complexity of the insurance business.

9. Appointment of members to the inspection team

Estimate the time allotted for each task and assign team members to the team members by
determining

the estimated hours for all sections of the inspection based on previous inspection experience. in
inspection

The

following

points should be kept in mind while fixing the time:

(1) Time limits for each subject of inspection;

(2) Time limits for community inspections;

(3) the number and availability of members required;

(4) the experience and expertise of inspection members;

(5) Standards of records and data management systems of insurance institutions;

(6) To provide practical training and experience to members of the inspection team in all aspects of
inspection

required; (7)
proper coordination and proper distribution of inspection team work with a view to avoiding
duplication of work;

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6. Responsibilities and duties of inspection team

The inspection team will start work according to the plan given to them so that they can complete
the inspection work

within the time specified by the authority and submit the report to the supervisor officer.
Responsibilities

and duties of inspection team during inspection are as follows:

(1) inspect the books, accounts and transactions maintained by the insurance institutions without
prior notice, on the basis

of complaints or information given to the authorities, suddenly appearing at their head office or
branch

office;

(2) The inspection team shall visit the insurance company for verification of authenticity on the basis
of demand

to provide information, data and documents prior to the inspection;

(3) contact the concerned banks, insurance customers or stakeholders for verification of information,
data or

documents collected by the inspection team;

(4) The inspection team shall carry out the inspection by reviewing and analyzing the various data
and reports

submitted to the authority by the insurance company;

(5) the inspection team shall carry out inspection on the basis of any complaint;

(6) After completing the inspection work, the team leader report of the inspection team shall be

prepared and submitted to the appropriate authority after review by the supervisor officer in

accordance with the attached report.

7. Code of Conduct for Visitors

The inspection team shall adhere to the following code of conduct:

(1) Members of the inspection team have a statutory duty obligation as representatives of the
authority;
(2) maintain the highest professional standards in all dealings with insurance company officials;

(3) the conduct of the members of the inspection team shall not reflect any selfishness of arrogance
or authority;

(4) No bias shall be made in inspection work;

(5) All rules given by the authorities shall be strictly followed;

(6) Team members must maintain ethics in inspection work; (7)

No comment shall be made on any conflicting matter without consultation with the supervising
officer;

(8) Any sensitive decision or event of the authority shall not be disclosed to the insurance company
or

any comment shall be made;

The authorities must maintain confidentiality;

(9)

(10) shall not involve themselves in any work related to the interests of insurance institutions;

(11) No unethical benefit shall be collected from the insurance company in private practice;

(12) The inspection team should have a working mindset aimed at assisting the development of
insurance institutions;

(13) No information collected during inspection shall be given to any print media or journalist.

8. Inspection plan

(a) A plan for the proper conduct of the work of the inspection team taking into account the
following matters:

will formulate

1. purpose of inspection;

2. Scope of Inspection:

3. sampling and verification;

4. inspection procedures and controls;

5. Examination time period;

6. members of the inspection team;

(b) In preparing the inspection plan the team leader shall consider the following points:

(1) In case of head office the plan shall be uniform and in case of branch office the plan shall be

other types;
(2) one type of plan in the case of life insurance companies and another type of plan in the case of
non-life

insurance companies;

(3) Size and functional complexity of the insurance business.

9. Appointment of members to the inspection team

Estimate the time allotted for each task and assign team members to the team members by
determining

the estimated hours for all sections of the inspection based on previous inspection experience. in
inspection

The

following

points should be kept in mind while fixing the time:

(1) Time limits for each subject of inspection;

(2) Time limits for community inspections;

(3) the number and availability of members required;

(4) the experience and expertise of inspection members;

(5) Standards of records and data management systems of insurance institutions;

(6) To provide practical training and experience to members of the inspection team in all aspects of
inspection

required; (7)

proper coordination and proper distribution of inspection team work with a view to avoiding
duplication of work;

<

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(3) Size and functional complexity of the insurance business.

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9. Appointment of members to the inspection team

Estimate the time allotted for each task and assign team members to the team members by
determining

the estimated hours for all sections of the inspection based on previous inspection experience.

The following points should be kept in mind while scheduling the inspection:
(1) Time limit for each subject of inspection:

(2) Time limits for community inspections;

(3) the number and availability of members required;

(4) the experience and expertise of inspection members;

(5) Standards of records and data management systems of insurance institutions;

(6) require practical training and experience for inspection team members in all areas of

inspection;

(7) proper coordination and proper distribution of inspection team work with a view to avoiding
duplication of work;

(8) assigning work on a priority basis to complete the inspection work within the salvaged time;

(9) Members of the inspection team must be informed of the purpose, responsibilities, time
allocated and relevant to the inspection

Other things to know. The

appointed inspection team consists of a supervisory officer of the authority headed by a team leader

Will work under supervision.

10. Working of inspection and monitoring wing

On the basis of the inspection report, the inspection and monitoring wing will organize a hearing in
the presence of the authority along with

issuing a show cause notice on the charges of irregularities and violation of law for defense with the
approval of the authority.

After the hearing, the authority's decision along with the reasons will be communicated to the
insurance companies. If the insurance company is

aggrieved, it can apply for a review as per the provisions of the Insurance Act. In view of the review
application, the

review hearing will be held in the presence of the authority. After completing the review hearing, the
decision of the authority will be

communicated to the insurance company.

11.00 Questions related to business management of insurance companies

Inspection team to collect various data of life and non-life insurance companies during inspection

A questionnaire according to the nature of business shall be provided as per Annexure-A. The
answers to the questions of the

questionnaire will be returned to the inspection team with signature and seal provided by the
insurance company.
12.00 Requirement of documents required for inspection

At the beginning of the work of inspecting the main office or branch office of the insurance
institution, the office-based basis is described below

The documents and information needs to be provided to the management authority in case of need.

(1)

(2) Chart of Accounts;

Name of officer assigned and responsible for the section of the insurance company;

Association Memorandum and Association Rules of Insurance Institutions;

(3)

(8)

Minutes of the Annual General Meeting;

(5)

Rewamil (Insurance Institutions, Head Offices and Branch Offices);

(6) financial statements and related schedules (of insurance companies, head offices and branch
offices);

(7) schedule of investment;

(8) list of debtors (insurance companies, head offices and branch offices);

(9)

List of creditors (insurance companies, head offices and branch offices);

(10)

Claim Intimation, Claim Settlement and Claim Pending List (Insurance Institution, Head Office and

branch office); (11)

Statement of assets and liabilities;

(12) List of business plans and achievements (insurance companies, head offices and branch offices);

(13) copy of reinsurance contract;

(14) Underwriting Policy;

(15) purchase and supply policies;

(16) Copy of Rental Agreement (Insurance Company, Head Office and Branch Office);

(17) Service rules of officers and employees of insurance institutions;

(18) Pay slip (last month) (Insurance Institution, Head Office and Branch Office); (19)

Reinsurance Accounts (Insurance Institutions, Head Offices and Branch Offices);

(20) Copy of approved insurance plan/policy;

(21) List of Advances (Insurance Institutions, Head Offices and Branch Offices);

(22) List of Bank Accounts and Bank Statements (Insurance Institutions, Head Offices and Branches

office); (23)

list of members of the board of directors;

(24) list of committees of the board of directors;

(25) Minutes of the Board of Directors:

(26)

List of agents (insurance companies, head offices and branch offices);

(27)

list of vehicles to be used in the name and pool of allocated officers (insurance companies,

head offices and branch offices);

(28) field commission and remuneration policy for procurement of business;

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(11) Statement of assets and liabilities;

(12) List of business plans and achievements (insurance companies, head offices and branch offices);

(13) copy of reinsurance contract;

(14) Underwriting Policy;

(15) purchase and supply policies;

(16) Copy of Rental Agreement (Insurance Company, Head Office and Branch Office);

(17) Service rules of officers and employees of insurance

institutions; (18) Pay slip (last month) (Insurance Institution, Head Office and Branch Office);

(19) Reinsurance Accounts (Insurance Institutions, Head Offices and Branch Offices);

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(20) Copy of approved insurance plan/policy;

(21) List of Advances (Insurance Institutions, Head Offices and Branch Offices);

(22) List of Bank Accounts and Bank Statements (Insurance Institutions, Head Offices and Branch

Offices);

(23) list of members of the board of directors;

(24) list of committees of the board of directors;

(25) minutes of the board of directors;

(26) list of agents (insurance companies, head offices and branch offices);

(27) list of vehicles to be used in the name and pool of allocated officers (insurance companies,

head offices and branch offices);

(28) field commission and remuneration policy for procurement of business;

13. The strategy or technique of checking the transactions of the insurance company during
inspection

There are many types of transactions in insurance companies. For example, from collecting
premiums from insurance

customers to paying agents' commissions, managing overheads and paying insurance claims, etc. All
these

transactions are stored in order of Debit Voucher, Credit Voucher and Journal Voucher number in the
Cash Book, Bank

Book, Insurance Claim Register, Premium Collection Register and Ledger/Khatian Book of the
insurance company. It is not

possible for inspection team to check so many transactions in short time and it is difficult task.
Therefore,

the inspection team will apply the following techniques to easily check the transactions of insurance
companies:

Check if any specific information is available;

(1) If there is no specific information, adopt the following strategy or technique:

(a) checking the insurance institution's cash balances, bank balances, necessary ledgers and

premium collection registers, premium receipts issued for collection of premiums;

(b) Examination of representative transactions or test checking- Selection of a few representative

transactions from a large number of transactions and testing them as a sample is called sample
examination

of representative transactions;

(c) a random selection or haphazard selection of transactions;

14. Matters of Inspection of Life Insurance Institutions

Life insurance companies will check the following points:

(a) Premium Collection (Head Office, Local Office, Service Cell and Service Centre)

Method of reducing premium book stock account; (1)

(2)
whether

the premium receipts are kept as per the serial number in the book;

(3) whether premium collection register is maintained as per receipt issued;

Underwriting the first risk as per proposal against premium collected (8)

Whether the receipt is properly issued;

(5)

whether the book of receipts is kept properly or not;

(6) Whether reconciliation of receipt book of branch office with head office is done or not;

(7)

Insurance companies that issue receipts through automation through computer technology

Method of keeping accounts;

(8) Whether the cash amount of collected premium is properly deposited as bank of the insurance
company in due time

No;

(9)

whether the account of the insured customer is kept

up

to date; (10) whether timely

and proper premium notices have been sent to the insured;

(11) whether Tamadi has sent timely notices to the insured;

(12) The rate of maturity of the policy shall be filled by the insurance company in connection with the
concerned officer

Will collect information with signature.

(13) Whether any insurance risk has been assumed without or before collection of premium.

(b) Management Expenses (Head Office, Local Office, Service Cell and Service Centre)

(1) Commission

(b) whether commission is paid to active agents licensed under the provisions of the Insurance

Act;

(a) Whether curtailment of withholding tax from commission is reduced.

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(b) Management Expenses (Head Office, Local Office, Service Cell and Service Centre)
41%

(1) Commission

(b) whether commission is paid to active agents licensed under the provisions of the Insurance

Act;

(a) whether proper tax has been deducted from the commission;

(e) whether commission paid through banking channel or not;

(e) whether commission has been paid in terms of section 58 of the Insurance Act, 2010;

(g) whether the insurance has provided any rebate facility on the commission to the customer;

(2) Other expenses of business procurement

The sample to be tested will examine house rent, salary and allowances of development officers,
vehicle maintenance

expenses at field level, training expenses, development meeting expenses, vehicle fuel, tour bills for
business development,

policy stamps, entertainment, conference expenses, etc.

(3) The account of total management expenses shall be prepared and collected from the head office
or branch office

through the insurance institution under the signature of the chief financial officer or responsible
officer.

(c) Reinsurance (Head Office)

To protect the interest of insurance customers, the insurance company will verify whether the
reinsurance is done properly in accordance

with the treaty and check the reinsurance accounting system.

(d) Investment (Head Office)

Collect the investment list from the insurance company and check the physical documents if
necessary. Insurance

customers need to ensure that there are investments or assets in line with the reserve. It will check
whether the

said investment insurance has been made in accordance with the provisions of the Act or not.
Insurance

For investment by the institution, fill up attachment-D and collect it under the signature of the
officer-in-charge.

(e) Insurance Claims (Head Office, Service Centre)

Collect and verify information regarding insurance claims from insurance companies. The inspection
team will

adopt techniques or strategies to examine total claims raised, outstanding claims and unsatisfied
claims and their reasons

in the data. It will properly check whether the insurance claim is settled as per the insurance law and
the terms

of the policy issued to the insured customer. Will thoroughly review the reasons for outstanding
claims. The

information regarding the insurance claim is prepared by the insurance company in Annexure-T and
accepted by the responsible officer

will save

(f) Solvency Margin

It must be ensured that the solvency margin of the insurer is adequate.

(g) Bank account of the insurance institution

After collecting the bank list of the insurance company, he will check some transactions on a sample
basis along with

the bank statement accordingly. Each bank will check whether the accounts are properly reconciled
or not.

(h) Employment in insurance companies

Check whether the insurance company has any standard policy for recruitment, promotion or salary
increment.

Collect the organogram of the organization and verify the rationality of the recruitment of monthly
paid manpower.

Also check whether the insurance company has any service rules or not.

(or) various policies in conducting the business of insurance institutions

In conducting the business of the insurance company, the commission will verify the policies for the
collection of business,

the policy of making various allowances including remuneration, the policy of allotment of vehicles,
the purchase and procurement

manual, the policy of opening new offices, the policy of storing furniture and fixers, the policy of
training etc. and whether all

these are followed or not. Will check that too.

(j) Proceedings of the Board of Directors

It will verify whether the Board of Directors has been constituted in compliance with the provisions

of Sections 74, 75, 76, 77, 78 and 79 of the Insurance Act, 2010. Collecting the minutes of the board
of
directors meetings will verify whether all the decisions taken in the management of the company
have been properly

followed or not. The Board of Directors will also examine what benefits are received from the
insurance company.

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(k) Branch office/office of insurance institution

The branch office/office of the insurance office shall verify whether the opening has been made in
accordance

with the provisions of section 14 of the Insurance Act, 2010 and related regulations. The branch
office of the insurance institution

will collect the list from the insurance institution as per Annexure-6.

(l) Appointment of Agents and Employers of Agents (Head Office)

In accordance with the provisions of Sections 124 and 125 of the Insurance Act, 2010, the agent and
the employer of

the agent shall check whether they have been appointed or not. It will collect the information from
the insurance company as per Annexure F and

verify the same.

(d) Tax deducted at source (head office)

According to the provisions of Income Tax Ordinance 1984, insurance companies will deduct tax

from various sources or value added tax Act 1991 and deposit the challan in the treasury of
Bangladesh Bank. As

per Annexure-G, the insurance company will make and collect through the insurance company.

(d) Monitoring of Vehicle Inventory (Head Office)

The insurance company collects a list of whether the car is actually used for the company's business

Will check with vehicle log book.

(n) Monitoring of Subsidiary Activities (Head Office)

The inspection team will monitor the operations of the insurance companies' subsidiaries.

15. Matters of Inspection in Non-Life Insurance Institutions

In non-life insurance companies will examine the following matters:

(a) Collection of premiums (head office, principal office and branch office);
(1) Method of summarizing premium book stock account;

(ii) whether the premium receipts are kept serially numbered in the book or not;

(3) whether premium collection register is maintained as per receipt issued;

(iv) whether the first risk acceptance receipt is properly issued as per the decision to write off the
proposal

against the premium collected;

(5) Whether the book of receipts is kept properly or not;

(6) Whether reconciliation of receipt book of branch office with head office is done or not;

(7) Account keeping procedures in insurance institutions that issue receipts through computer
technology

in an automated manner;

(8) Whether the cash amount of collected premium is properly deposited in the bank of the
insurance company in due course

No;

(9) Check whether any risk has been assumed without collection of premium or before collection of
premium

will do

(b) Administrative expenses (head office, principal office and branch office

(1) Commission

(b) Commission paid to active agents licensed under the provisions of the Insurance Act

what not;

(a) whether proper tax has been deducted from the commission;

(e) whether commission paid through banking channel or not;

(e) whether commission has been paid in terms of section 59 of the Insurance Act, 2010;

(g) whether the insurance has provided any rebate facility on the commission to the customer;

(2) Other business procurement expenses (head office, principal office and branch office)

By selecting the sample, the house rent, salary and allowances of development officers, vehicle
maintenance expenses at

field level, training expenses, development meeting expenses, vehicle fuel, tour bills for business
development, policy stamps,

entertainment, conference expenses etc. will be examined.

(1) The account of total management expenses should be prepared and collected from the head
office or

branch office through the affiliated insurance company under the signature of the chief financial
officer or responsible

officer.

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41%

(2) Other business procurement expenses (head office, principal office and branch office)

By selecting the sample, the house rent, salary and allowances of development officers, vehicle
maintenance expenses at

field level, training expenses, development meeting expenses, vehicle fuel, tour bills for business
development, policy stamps,

entertainment, conference expenses etc. will be examined.

(1) The account of total management expenses should be prepared and collected from the head
office or

branch office through the affiliated insurance company under the signature of the chief financial
officer or responsible

officer.

(c) Reinsurance (Head Office, Principal Office and Branch Office)

In order to protect the interests of insurance customers, insurance companies will check whether
reinsurance is done

properly and check the reinsurance accounting system. Check whether the quarterly reports of
reinsurance have been filed

with the appropriate authorities. In the case of reinsurance in particular, the General Insurance
Corporation will check

whether the reinsurance is satisfactorily carried out in accordance with the treaty and also check the
accounts of

the reinsurance.

(d) Investment (Head Office)

Collect the list of investments from the insurance company and check the physical documents if
necessary.

Insurance customers need to ensure that there are investments or assets in line with the reserve.
Check

whether the provisions of the Investment Insurance Act have been complied with or not.
The insurance company will fill the attachment-d for investment and collect it under the signature of
the officer-in-

charge.

(e) Insurance Claims: (Head Office)

It will collect and examine the information related to insurance claims from the insurance company,
such as claims

raised, claims settled and claims unsettled. The inspection team will follow the technique or
technique in carrying

out the test. To properly check whether the claim is settled as per the insurance law and the terms of
the policy

issued to the insurance customer. Will thoroughly review the reasons for outstanding claims. The
insurance claim related

information shall be prepared by the insurance company in the attachment and stored under the
signature of the responsible officer.

(f) Solvency Margin

It must be ensured that the solvency margin of the insurer is adequate.

(g) Bank account of insurance institution (head office, principal office and branch office)

Collect the bank list of the insurance company and select the sample accordingly along with the bank
statement

Will check some transactions on basis. Each bank will verify the proper reconciliation of

accounts.

(h) Recruitment in Insurance Companies (Head Office, Principal Office and Branch Office)

Check whether the insurance company has any standard policy for recruitment, promotion or salary
increment. The

rationality of employing monthly salaried manpower should be verified by collecting the agranogram
of the

organization. Also check whether the insurance company has any service rules or not.

(j) Various policies in conducting the business of insurance companies

In conducting the business of the insurance company, the commission will verify the policy of making
various

allowances including remuneration, policy of allotment of vehicles, purchase and procurement

manual, policy of opening of new

office, policy of storage of furniture and fixtures, training policy etc. for business collection and
whether all these
are being followed or not. will verify

(j) Proceedings of the Board of Directors (Head Office)

It will verify whether the Board of Directors has been constituted following the provisions of

Sections 74, 75, 76, 77, 78 and 79 of the Insurance Act, 2010. It will also verify whether the decisions
taken in the

management of the company have been properly followed or not by collecting the minutes of the
meetings of the board

of directors. The Board of Directors will examine what benefits are received from the insurance
company.

(k) Branch Office/Office of the Insurance Institution: (Head Office)

The branch office/office of the insurance office shall verify whether it has been opened in accordance
with the

provisions of section 14 of the Insurance Act, 2010. The branch office/office of the insurance
institution will collect the list from the insurance

institution as per Annexure-F.

(l) Appointment of Agents: (Head Office, Principal Office and Branch Office)

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(h) Recruitment in Insurance Companies (Head Office, Principal Office and Branch Office)

41%

Check whether the insurance company has any standard policy for recruitment, promotion or salary
increment. The

rationality of employing monthly salaried manpower should be verified by collecting the agranogram
of the

organization. Also check whether the insurance company has any service rules or not.

(j) Various policies in conducting the business of insurance companies

In conducting the business of the insurance company, the commission will verify the policy of making
various

allowances including remuneration, policy of allotment of vehicles, purchase and procurement

manual, policy of opening of new

office, policy of storage of furniture and fixtures, training policy etc. for business collection and
whether all these

are being followed or not. will verify

(j) Proceedings of the Board of Directors (Head Office)

It will verify whether the Board of Directors has been constituted following the provisions of
Sections 74, 75, 76, 77, 78 and 79 of the Insurance Act, 2010. It will also verify whether the decisions
taken in the

management of the company have been properly followed or not by collecting the minutes of the
meetings of the board

of directors. The Board of Directors will examine what benefits are received from the insurance
company.

(k) Branch Office/Office of the Insurance Institution: (Head Office)

The branch office/office of the insurance office shall verify whether it has been opened as per the
provisions of

section 14 of the Insurance Act, 2010. Branch office/office information of the insurance institution
will collect the list from the insurance

institution as per Annexure-F.

(l) Appointment of Agents: (Head Office, Principal Office and Branch Office)

As per the provisions of Section 124 of the Insurance Act, 2010, the agent shall check whether or not
it has been

given. As per Annexure - I will collect the information from the insurance company and verify the
same.

(d) Tax deducted at source:

According to the provisions of the Income Tax Ordinance 1984, the insurance company will deduct

the tax from various sources or the Value Added Tax Act, 1991 and deposit it in the treasury of

Bangladesh Bank. As per Annexure-G, the insurance company will make and collect it.

(f) Vehicle list monitoring (head office, principal office and branch office)

The insurance company will check with the vehicle log book as listed whether the vehicle is actually
used

for the company's business.

(n) Monitoring of Subsidiary Activities: (Head Office)

The inspection team will monitor the operations and profit and loss accounts of the subsidiary
companies of the insurance companies for the benefit

of the insurance customers.

16. Conclusion

This inspection manual has been prepared based on the actual activities of insurance companies in
Bangladesh. Based

on the practical work of the inspection, the said inspection manual will be updated from time to time
by changing,

augmenting or amending it.

Appendix – 1

The provisions of the Insurance Act, 2010 must be complied with:

Section 11 Renewal of Certificate of Registration (2): The insurer shall submit the application for
renewal of registration

for any year to the authority before 30th November of the previous year and shall pay the prescribed
fee along with the application.

Section 21

(1) No insurer shall be registered to carry on any class of insurance business after the coming into

force of this Act, except such insurer who was engaged in any class of insurance business in

Bangladesh before the coming into force of this Act, unless he has the amount of paid-up capital
specified

in Schedule 1 and His shares are not redeemed in accordance with the procedure prescribed by the
rules:

Provided that the Government may, if necessary, by notification in the Government Gazette, increase
or

decrease the amount of paid-up capital:

Provided further that before applying for registration, the entrepreneurs shall deposit their
respective share of paid

up capital in the name of the company in any Scheduled Bank in Bangladesh without liability and the
said money

shall remain as deposit without liability.

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