Corruption in Rupali Life Insurance (part-3): How fabricated revenue, hidden costs created artificial surplus?
Special Correspondent
A deep-rooted web of financial fraud has been uncovered at Rupali Life Insurance Company Limited, where massive manipulation of renewal premium records was utilized to artificially inflate earnings.
According to insurance sector regulations, life insurance companies operate on a financial year spanning January 1 to December 31, with a grace period extending until January 31 to allow for the closing of accounts.
During this grace period, collected renewal premiums can legally be recorded in the annual report as 'outstanding premiums' or potential income, to be adjusted against the December closing.
However, Rupali Life systematically abused this provision. In 2024, the company reported a total renewal premium collection of Tk 143.89 crore. Shockingly, Tk 74.19 crore of this amount—accounting for a staggering 52 percent of total renewal premiums—was logged as outstanding premiums, implying that more than half of the company's annual income would be gathered in just a single month.
The systemic nature of this fabrication became evident when actual year-end collection data was reviewed. Out of the claimed Tk 74.19 crore in outstanding premiums, only Tk 46.28 crore (62%) was ever genuinely collected. The remaining Tk 27.91 crore was never realized or deposited into the company's actual funds.
Despite this massive shortfall, the management treated the non-existent Tk 27.91 crore as valid income to finalize their year-end life fund and surplus calculations.
Financial analysis reveals that if this uncollected money had been properly deducted (even after accounting for an average 10 percent renewal commission), the company’s reported Tk 22.13 crore surplus would have instantly transformed into a real deficit of Tk 3 crore. Instead of addressing this shortfall, the company’s directors used the artificial income to pocket a 10 percent dividend.
Beyond revenue inflation, Rupali Life engaged in severe statutory violations to mask its true operational expenditures. Section 62(2) of the Insurance Act 2010 mandates that life insurance companies must include a proper portion of their capital expenditures—such as fixed asset depreciation, fair value adjustments, and losses from stock trading—when calculating their total management expenses.
This law was specifically enacted to ensure transparency and prevent arbitrary spending.
Defying this legal obligation, Rupali Life completely omitted capital expenditures from its management expense calculations. Over a nine-year period spanning from 2016 to 2024, the company officially reported its total management expenses as Tk 777.57 crore.
However, had the company complied with the law and factored in its true capital expenditures, the actual management expenses would have reached Tk 809.57 crore.
This deliberate accounting omission allowed the company to successfully hide Tk 32 crore in operational expenses from regulators and the public.
In the 2024 financial year alone, the company excluded Tk 3.22 crore in capital expenditures from its books. By burying this data, the management illegally claimed that their spending was Tk 48 lakh below the government-approved expenditure limit, effectively masking the grim reality of their excessive spending.
Nobody was available to make comments on the above allegations.
