Insurance regulator stops offering special rate for BSRM after 13yrs

BSRM, a pioneer of Bangladesh’s steel sector, used to enjoy a special marine insurance premium rate, which gave them an edge over other competitors since 2007, according to the Insurance Development and Regulatory Authority (IDRA).

Now BSRM is opposing to pay a uniform premium rate, which has been made effective since last year. The premium rate is 22 percent lower than the previous rate, yet it is 100 percent higher for BSRM as it used to pay much lower than other steel makers in the country.

“Premium rates are determined for each type or segment of risks and not for each client individually, as is being sought by BSRM. This is the universal practice,” said a senior IDRA official.

The official said prior to a revision of marine insurance tariff in 2020, special rates used to be granted to some clients based on some criteria and BSRM was one such case of special rate.

“There is no need to grant any special premium rate to any particular company,” said the official quoting a recommendation of the Central Rating Committee that determines premium rates.

What rate BSRM used to get:

BSRM used to pay marine insurance premium at only 0.15 percent, which was around 0.40 percent for other steel makers and the company had been availing the benefit for long 13 years, according to an IDRA document.

Accordingly, BSRM spent Tk 15.59 crore as insurance premium against its import in 2018. The amount went down to Tk 12.57 crore in 2019 and the company got a claim worth over Tk 2 crore in the same year. In 2020 the company paid nearly Tk 20 crore as insurance premium.

If BSRM had to pay the same premium rate other steel makers did, the amount would be just doubled.

“Spending for insurance premium is an important element in our production cost. The premium rate is 0.10 percent and 0.07 percent for steel mills in India and Pakistan respectively,” claimed a BSRM letter sent to the chairperson of Bangladesh Competition Commission seeking remedy on the issue.

“We want that the IDRA keeps the premium rate open,” reads the letter.

What do the insurers say?

“It is unfair to pay a special rate for a particular company,” commented a top official of a leading non-life insurance company.

“We had stopped to grant the special rate to BSRM soon after the IDRA introduced the new tariff last year. But some insurers are still offering BSRM 0.15 percent premium violating the IDRA’s decision,” he added.

About BSRM:

Established in 1952, BSRM Group has now become the country’s biggest steel maker with eight factories. The group employs around 10,000 people, including temporary employment.

BSRM imported Tk 7,501 crore worth of steel raw materials in the fiscal 2018-19 and paid Tk 2,000 crore as different taxes and utility bills for the year.

BSRM’s steel products have been used in many megaprojects in Bangladesh. As of 2020, BSRM Steel produced 2 million tonnes of MS billet and 1.6 million tonnes of re-rolling steel.