IDRA suspends non-life insurance agents, scraps commissions from 2026
Business Desk :
The Insurance Development and Regulatory Authority (IDRA) has announced the suspension of all individual agent licences in the non-life insurance sector, effectively eliminating commission payments from 1 January 2026.
The decision, aimed at protecting policyholders, strengthening insurers’ financial health, and restoring market discipline, was communicated through a circular issued on 23 December.
According to IDRA, the suspension follows recommendations from the Bangladesh Insurance Association (BIA), decisions taken in regulatory meetings, and proposals submitted by insurers themselves.
From the effective date, no individual agents will operate in the non-life segment, and insurers will have no legal basis to pay commissions. Citing Section 58(1) of the Insurance Act 2010, IDRA reiterated that commissions or any remuneration can only be paid to licensed agents or brokers.
The circular also introduced restrictions on development officers’ pay. Their salaries, allowances, or benefits cannot be linked to a percentage of premiums.
Except for contract-based appointments, all development officers must be compensated according to the insurer’s approved pay scale, as clearly mentioned in appointment letters.
Salaries and benefits must be paid through designated management expense accounts via bank transfers or account-payee cheques. These rules do not apply to banks conducting bancassurance or to insurtech operators.
IDRA cited provisions of the Insurance Act that define agents and empower the regulator to determine licence validity, renewal conditions, and suspensions. Since the BIA and most insurers requested the suspension, IDRA exercised its statutory authority to implement the order.
Industry experts argue that commission-based business had become a major barrier to sustainable growth in the non-life insurance sector.
Many insurers believe eliminating commissions will reduce irregularities, curb unhealthy competition, improve underwriting discipline, and allow companies to strengthen reserves, pay higher dividends to shareholders, and contribute more to government revenue.
The BIA held multiple meetings with chairpersons and CEOs of insurance companies, during which a majority agreed that scrapping agent commissions was necessary to increase transparency, reduce misconduct, and restore market order.
Insurers assured they could continue operations without relying on agent commissions.
Following BIA’s request to reduce non-life agent commission rates from 15% to zero, IDRA held meetings on 25 and 27 November with insurers’ top executives.
Insurers were instructed to submit proposals on suspending agent licences by 5 December 2025, which culminated in the issuance of the circular.
On the day of the announcement, the board of directors of Peoples Insurance PLC welcomed the move, praising IDRA for its decision and instructing all branches to ensure strict compliance.
IDRA officials said full implementation of the circular is expected to address long-standing issues caused by excessive commissions, strengthen customer protection, and enhance the overall stability of Bangladesh’s insurance sector.