57pc insurance firms failing to pay claims unacceptable
Finance Minister Amir Khosru Mahmud Chowdhury on Monday issued a stern warning to defaulting insurers, labeling the failure of 57 percent of the country’s insurance companies to settle policyholders’ claims as “deeply frustrating” and completely unacceptable.
Speaking to reporters following an inspection of the Insurance Development and Regulatory Authority (IDRA) headquarters, the minister highlighted the mounting systemic risks within the financial sector and pledged comprehensive regulatory action to restore public trust.
“If 57 out of 100 companies cannot settle customers’ claims, that is in no way acceptable,” the minister stated, attributing the widespread crisis to deep-rooted corruption, operational disorder, and a legacy of weak regulatory enforcement.
He emphasized that citizens pay premiums out of their hard-earned income to secure their financial futures, yet a majority of firms fail to honor their contractual obligations when claims mature.
To address the immediate liquidity bottleneck, the finance minister directed failing insurance firms to liquidate their physical assets and real estate holdings.
He revealed that numerous insurers prioritized acquiring land and property over maintaining adequate liquid reserves for claim settlements.
“If they are facing a cash crunch, they must sell assets to pay claims,” Khosru asserted, warning that the government will impose strict, non-negotiable timelines for firms to clear their outstanding liabilities or face severe enforcement action.
Describing the operational health of several market players as highly alarming, Khosru noted that seven to eight insurance companies have deteriorated to a point where their continued operation remains under serious review.
To prevent failing entities from exploiting judicial stay orders to evade enforcement, the government is preparing comprehensive amendments to the Insurance Act.
The upcoming legislative package will introduce a formal resolution framework-similar to the mechanisms used in the banking sector-to handle distressed insurers and protect policyholders’ funds.
A primary pillar of the upcoming overhaul is the total digital automation of the industry.
Responding to findings that several insurers operated dual servers to maintain off-the-books transactions, Khosru warned that non-compliant firms will face immediate penalties. Under the new strategy, all insurance operations will transition to a single digital architecture.
The ministry is establishing an interoperable framework that directly integrates insurers and the IDRA with Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC) to ensure real-time financial transparency.
Addressing structural weaknesses within the regulator itself, the minister acknowledged that the IDRA currently suffers from severe manpower shortages in both volume and specialized expertise.
To build strong oversight capabilities, the government will phase out deputed civil servants over the next three to five years, replacing them with a permanent, professionally trained workforce capable of executing modern risk-based supervision.
Closing his address, Khosru acknowledged that entrenched vested interests may attempt to block enforcement and return to past practices as regulations tighten.
“This is a difficult task, but it is one we must undertake in the interest of the people of Bangladesh. That opportunity will not be given again. We have shut that door,” he said, reiterating the government’s resolve to align the domestic insurance market with global operational standards.
