A worrying trend has surfaced in Bangladesh’s non-life insurance sector. According to data released by the Insurance Development and Regulatory Authority (IDRA), nearly 68% of insurance claims remained unpaid by the end of 2024.
Out of the total Tk3,582.89 crore worth of claims filed during the year, only Tk1,481.63 crore (41%) was paid. This has left policyholders grappling with unresolved claims worth approximately Tk2,635 crore.
The claim settlement ratio in 2024, although marginally improved, still reflects significant underperformance. In 2023, only 32% of claims were settled — Tk1,237.40 crore out of total claims of Tk3,871.92 crore. Despite the slight increase in payout ratio in 2024, the absolute number of unpaid claims remains alarmingly high.
Many individuals who placed their trust in insurance policies for financial protection are now facing hardship. The delayed settlements have resulted in severe distress, with some policyholders struggling to cover losses from accidents, property damage, and other insured events.
As per the existing law, claims should be settled within 90 days. However, this provision is frequently overlooked, exacerbating the suffering of the insured.
In response to the rising volume of unsettled claims, IDRA is planning to take disciplinary steps. A governance review meeting is expected to be held soon with the directors of insurance companies demonstrating poor claim settlement records.
The authority aims to hold insurers accountable and improve transparency and trust in the sector.
Insurers cite reinsurance delays as a primary obstacle. By law, 50% of non-life policies must be reinsured through Sadharan Bima Corporation (SBC), while the rest can be placed with foreign reinsurers. However, insurers claim that SBC’s slow settlement process hinders their ability to promptly reimburse policyholders. In contrast, foreign reinsurers are known for relatively quicker claim settlements.
To maintain goodwill and reputation, a few insurers have reportedly been settling claims from their own reserves, even while waiting for reimbursements from reinsurers. This practice, though commendable, is not sustainable across the board, especially for companies with weaker financial positions.
SBC has responded by attributing delays to procedural issues. According to their communication with IDRA, incomplete documentation and late premium payments by insurers are often the root causes of delayed settlements. This points to a systemic issue involving both the insurers and reinsurers.
The current situation in Bangladesh’s non-life insurance sector raises concerns about operational inefficiencies, regulatory compliance, and policyholder protection. While IDRA’s proposed interventions may offer hope, restoring faith in the insurance ecosystem will require structural reforms, improved governance, and timely coordination among all stakeholders.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
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Published on: Apr 16, 2025, 3:24 PM IST
Team Angel One
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