IDRA pushes insurance law reform for tighter control, consumer safety
Staff Reporter:
The amendment to Bangladesh’s insurance law has hit a snag as the Bangladesh Insurance Association (BIA) — the organisation representing insurance company owners — has yet to submit its feedback.
According to the Insurance Development and Regulatory Authority (IDRA), this delay is slowing down vital reforms meant to protect policyholders and strengthen trust in the financial system.
Officials at IDRA have expressed concern that without timely feedback from the BIA, it will be difficult to finalise the changes aimed at ensuring transparency and accountability in the country’s insurance sector.
They warned that prolonged delays could undermine efforts to safeguard customer interests and preserve public confidence in financial institutions.
The proposed amendment seeks to give IDRA stronger oversight powers. Under the draft, the regulator would be able to transfer shares, assets, or liabilities of troubled insurance companies to third parties, and if necessary, initiate liquidation procedures.
It would also have the authority to remove or replace company chairmen, directors, chief executives, or any key employees found responsible for mismanagement or malpractice.
The law aims to ensure stability in the financial system by regulating the payment, settlement, and liquidation processes of insurance firms. It also includes measures to protect consumers,
prevent unnecessary government losses, and preserve the asset value of insurance companies.
In a bid to rebuild trust in the sector, the amendment proposes the creation of a consumer protection fund and compensation mechanisms for shareholders and creditors.
It also allows for the temporary government ownership of insurance companies when needed and for the formation of “bridge insurance companies to facilitate the sale or restructuring of struggling firms.
Separate provisions would be introduced for Islamic insurance (takaful) operators, while a new council would be formed to manage crises or emergencies in the insurance sector.
Additionally, procedures for the liquidation of companies would be streamlined to ensure fair and timely settlement of liabilities.
Regulators believe that once approved, the amendment will mark a major step toward restoring credibility and ensuring long-term stability in Bangladesh’s insurance industry.