Justice prevails over alleged fraud and corruption
Colombo District Court Judge Sujeewa Nishanka issued an interim injunction essentially forbidding any foreign company that is not registered as a company, or as insurance brokers, from offering any insurance related services in the country. The complainant in this case, Strategic Insurance Brokers (Sib) sought an enjoining order against JB Boda and Co of Singapore from holding itself out as an insurance broker. The matter of the enjoining order was taken up on 17th January.
Strategic Insurance Brokers, a brokering Company located in Colombo had sought an injunction preventing the defendant Company from holding itself out as an insurance broker, or engaging in any activity that concerns insurance brokering services, as it was not registered as a brokering company with the Insurance Regulatory Commission of Sri Lanka. Nor was the defendant a member of the accredited Brokers Association of Sri Lanka.
Romesh de Silva, PC appearing for the complainant Sib, in his submissions before court stated that the defendant Company had been making bids for major tenders on insurance related matters. The plaint filed states that the defendant had been awarded tenders illegitimately by state statutory bodies such as the National Insurance Trust Fund.
Meanwhile Indrajith Fernando Director Sib revealed that National Insurance procurement programs have lapsed as at 31st December 2017 and have not been extended after expiry, due to what can only be called irresponsible behavior, and the malefide attempt to award tenders to illegitimate Overseas companies. Though the incumbent leader had offered lower premiums with the same panel of underwriters, the new awards were made at excessive exorbitant premiums to the overseas companies, he stated.
Fernando further added: There is now a process ongoing, challenging these awards, as the Line Ministry, vigilant to these unauthorized activities, had requested the local brokering company Sib Insurance Brokers to avail themselves of their right to appeal.
The Presidential Appeals Board (PAB), Cabinet Approval Procurement Committee (CAPC) and the Ministerial Procurement committees (MPC) are currently perusing these appeals against the intent to award several Procurements to the overseas companies operating illegitimately, he said.
The National Procurement Guidelines have been drafted for just such purposes to prevent companies being given awards pending appeal, when tenders are granted at excessive premiums compared to the bids offered by the competition, Fernando added.
He also added that if foreign companies are appointed to take up national reinsurance brokering assignments, it could very probably lead to corruption, as there is zero accountability regarding these companies’ operations, as the legislation with regard to insurance regulation also suggests.
Sib Director Indrajith Fernando also said: State controlled NITF (National Insurance Trust Fund) has already courted such a calamity. Though with the approval of CAPC/MPC and cabinet approval for the 2017 programs, there was an automatic one month plus extension from 31st December 2017 on a prorated basis with the incumbent panel of reinsurers, with the incumbent Brokers having agreed to renew, the NITF has not acted on such renewal. But Sri Lankans are exposed to a massive risk for the uninsured period, as a result of the above option not being exercised.
During the May flood calamity in 2017 just such a situation occurred when the NITF was flirting with the idea of procuring overseas illegitimate brokers, as they are doing now. When floods devastated the country for a second year in a row during May 22, 2017 the award of the most responsive and the competitive bid was delayed. The taxpayer had to foot the enormous bill of flood damage depriving the poor and the marginalized, who were prevented from receiving much more deserving higher claims and benefits. The much deserved credit for the Yahapalnaya Government that introduced this novel insurance scheme too was not forthcoming as a result.
All this has happened due to what SIB has gone to court against i.e foreign unregistered companies 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, he said.
Fernando added that the complainant company SIB’s Reinsurance Business is ably supported by a majority of the world’s leading underwriters and International brokers including Brokers at Lloyds, thus demonstrating a greater success in all the business placed by them in Sri Lanka. More importantly and significantly, in all the tenders of the NITF, for instance, their bids contained the best terms and were the most competitive. This is mainly due to the skills and due diligence practiced by them, along with carefully selected international partners and leading brokers in their respective regions.
“It is illegal and contrary to the express provisions of the Regulation of Insurance Industry Act, No. 43 of 2000 to hold out and/or retain and/or entertain such companies as Brokers especially in matters of requiring insurance services and Procurement” industry sources added.
Fernando showed extreme concern, on why when there is such a strict regime for registered brokers such overseas companies including fly by nights operate here unchecked.
He said industry sources are of the opinion: ‘They could run away, and there is no accountability for persons who are not registered in the country, as required by law.’
Section 79 of the Regulation of the Insurance Industry Act, No. 43 of 2000 (as amended) provides that;
“No person shall act or hold itself out as an insurance broker unless such person is a holder of a certificate of registration as a broker granted by the Board and is a member of an Association of Insurance Brokers approved by the Board.”