The insurance regulator is set to introduce offsite supervision to develop a sound and vibrant insurance industry in the country.

The offsite supervision -- CARAMEL -- like the central bank's CAMELS rating, will be based on analyses upon seven indicators - capital adequacy, asset quality, reinsurance, actuarial issues, management efficiency, earnings and profitability and liquidity -- to be evaluated on a scale of one to six.

This is the latest move in a series of reforms, initiated by the Insurance Development and Regulatory Authority (IDRA), as it seeks to stamp out graft and ensure efficiency in one of the key financial sectors.

The regulator wants to publish the rating for both life and non-life insurance companies by the end of this year, based on their performance in 2011.

IDRA chairman M Shefaque Ahmed said: "This will help improve the image of our insurance industry."

Mr Ahmed said it will protect the interests of policy-holders, their beneficiaries and potential policy-holders.

The IDRA chief said during preparation of CARAMEL, two types of supervisions -- off-site and on-site - will be conducted for ensuring consistency of the supervisory functions in line with the best international practices and principles.

An off-site supervision focuses on various returns and reports, including statutory reports, to see whether the facts and figures reported therein are correct and mutually consistent with each other.

If any information appears suspicious, it is referred to the on-site inspection team to examine books and accounts of the insurer concerned at its place of business.

The IDRA sources said the off-site supervision team will also identify the problem areas and refer those to the on-site supervision team for specific investigation.

News: The Daily Financial Express/Bangladesh/19-Nov-12