IDRA proposes sweeping powers to fix insurance crisis
Muhammad Ayub ALi :
The government is preparing to intervene decisively in Bangladesh’s ailing insurance sector with a new Insurer Resolution Ordinance-2025, modelled on the recent overhaul of the banking industry.
Drawn up by the Insurance Development and Regulatory Authority (IDRA), the draft law would permit temporary state control of insolvent insurers, the removal of senior management, and-where necessary-the liquidation, merger or sale of failing companies.
“The objective is to restore good governance, settle claims on time and safeguard policyholders,” IDRA spokesperson Saifunnahar Sumi told The New Nation.
Fifteen life insurers-including Fareast Islamic Life, Sunflower Life, Prime Islamic Life, Homeland Life and Padma Islamic Life-are undergoing special audits covering 2022-24. Together they owe policyholders an estimated Tk 4,615 crore, of which Tk 3,980 crore remains outstanding. Audit reports are due within 30 working days.
Key features of the draft ordinance are state takeover and restructuring, management overhaul, customer protection fund, risk management council and wider compensation.
The government may assume ownership, appoint administrators and transfer assets to “bridge insurance institutions” for up to two years (extendable to five). IDRA could dismiss chairmen, directors and chief executives. Customer Protection Fund is intended to compensate affected policyholders.
Risk Management Council will monitor systemic threats across the industry while the draft extends protection to shareholders and other creditors as well as policyholders with wider compensation unlike the Bank Resolution Ordinance.
Although the Insurance Act 2010 obliges companies to settle claims within 90 days of maturity, more than 1.1 million claims-worth roughly Tk 4,500 crore-remain unpaid across 32 life insurers.
IDRA will publish the draft for public consultation next week before finalising the ordinance. Officials say the reforms aim to rebuild public confidence and impose lasting discipline on a sector plagued by chronic governance failures.