Mismanagement blamed for Agrahara insurance scheme's failures

The Agrahara Insurance Scheme for state employees failed to ensure that beneficiaries received the intended benefits on time and turned out to be a loss-making fund over the years due to mismanagement, an audit report conducted by the National Audit Office revealed.

In a special report compiled by the Auditor General Office on the operation of the Agrahara Insurance Trust Fund, it was found that even though the objective of the Fund is to get all public officers to contribute to the Insurance Scheme, it failed to get all public officers contributed to the Fund.

The benefits of the Agrahara Insurance Scheme need to be paid to the beneficiaries within ten working days but there were occasions that more than five months had been taken to inform the beneficiaries about the rejection of their applications, the report indicated.

"In certain instances, it had taken a long time from two to twelve months from the date of receipt of application to pay the benefits. The fund had not taken action to pay 30,742 applications from 2003 to 2013 and 87,161 after the period from 2013 which had been identified as applications with errors. This can be identified as a major problem," the report stressed.

Even though the Fund could be able to earn a profit of Rs. 267 million in 2014 since then, the profits earned had declined gradually. The Fund had become a loss-making concern, having incurred losses amounting to Rs.127 million by 2017 and Rs. 264 million by 2018, the report noted.

In his recommendation, Auditor General W.P.C. Wickramaratne noted that the Fund which has become a loss-making entity at present needs to be converted into a profit-making Fund and to utilise effectively by providing benefits to the beneficiaries appropriately as expected by the Fund and beneficiaries.

According to a circular issued by the Ministry of Publ i c Administration in 1997, the Agrahara insurance scheme is a compulsory insurance coverage being covered by all public officers.

The Insurance Scheme was initiated with a contribution of Rs.11 and subsequently, the contribution had been increased to Rs.125 and it had been further widened as Agrahara ‘ Silver’ and ‘ Gold’ by contributing Rs. 300 and Rs. 600 monthly on a voluntary basis.

In 2016, the scheme was introduced to government pensioners as well with the contribution of

Rs 200 which was later increased to Rs 600.

However, the audit report found that the Fund had failed to get 129,454 public officers contributed to the Scheme even by June 30, 2019. Another 216,711 Agrahara cards had been issued more than the registered members and as such the internal control system in issuing those cards is at a weak level, the report found.

Though Agrahara Insurance is a compulsory insurance system, a sample test carried out in audit observed that about 35 percent of the public officers are unaware of this insurance scheme. Of the officers who replied about 47 percent had not got their E-cards even by September 19, 2019, the report noted.

Furthermore, about 74 percent of the selected sample was not aware of benefits gained from the E- card given to policyholders. Even though 665 awareness programs had been conducted in 2018 and 2019 on the Agrahara Insurance Scheme, according to the information received at the sample test it was observed that the expected results from those programmes could not be obtained.

Another mismanagement of the fund highlighted by the audit report is that even though payments had been made for 250,000 E- cards in 2012, the contract entity had failed to supply 28,370 cards.