Massive fraud in reinsurance

Massive fraud in reinsurance

A large sum of money amounting to Rs. 207 million rupees at Sri Lanka Insurance has been swindled as a result of the selection of an insurance broker whose license had been cancelled. This has occurred in connection with the reinsuring the properties of the Ceylon Petroleum Corporation. This allegation is being made by the the Coalition against Corruption.

The Coalition states that as a result, the assets of the Corporation have no insurance protection. An investigation on the matter has already been conducted by COPE – the Parliamentary Committee on Public Enterprises.

The Coalition alleges that the reinsurance broker concerned is an Indian named Suresh Balakrishnan who had been involved in a similar fraud while serving at M.F. Insurance and Reinsurance and the Indian authorities had cancelled his license. At an investigation by the Auditor General’s Department it has been revealed that he had not paid the premium Rs 92 million that had to be paid for 2009/2010 to the reinsurance companies in respect of the assets of the Petroleum Corporation. The broker had done the reinsurance under Transasia Management Advisor FZC from United Arab Emirates.

Subsequently, the Rs. 116 million (Rs. 116,850,000/-) reinsurance premium for the Petroleum Corporation for the year 2010/2011 has been paid to Suresh Balakrishnan on 02.07.2010 by the officials of Sri Lanka Insurance on a request made by Balakrishnan the previous day. Thus the total amount of reinsurance is Rs. 208 M.

It is the general practice worldwide to insure highly valuable property among several reinsurance companies in order to ensure that any liability is distributed among them. For this purpose the service of reputed brokers are made use of.

The total value of the assets of the Petroleum Corporation which presently have no insurance cover is estimated to be Rs.75.39 billion (75,97,909,813/-). These include the Sapugaskanda Oil Refinery, oil stocks stored at the refinery, the Sapugaskanda boiler, Orugodawatta terminal, oil stocks at the terminal, property at the Katunayake International Airport and oil stocks there, and the oil stocks at Muthurajawela.

Share the Post


No comment yet.

Leave a Reply

Your email address will not be published. Required fields are marked *