Bangladesh's Insurance Sector: Restoring customers’ trust biggest challenge: Experts
Staff Reporter :
Insurance plays a crucial role in safeguarding individuals and institutions from financial losses arising from accidents, disasters, and other unforeseen events. Despite its importance, Bangladesh’s insurance sector has failed to gain adequate traction-largely due to a deepening crisis of public trust. Sector insiders say restoring customer confidence is now the foremost challenge, as long delays in claim settlement, financial irregularities, mismanagement, and dishonest practices by agents continue to drive clients away.
Although Bangladesh’s economy has expanded and the insurable population has grown, only four out of every thousand people currently hold life insurance. Experts argue that outdated systems, lack of transparency, and weak governance have created persistent dissatisfaction among policyholders. Modernization and regulatory reform, they say, are urgently needed.
Regulators emphasize that ensuring transparency and speeding up claim settlement are key to rebuilding trust. They also highlight the need for clear communication about policy surrender rules, penalties, and investment risks. Despite numerous reforms, structural weaknesses remain deeply embedded in the sector.
Speaking on the sector’s prospects and challenges, IDRA Chairman Dr. M. Aslam Alam said Bangladesh suffers from a severe shortage of skilled insurance professionals. To address this, initiatives are underway to establish the Bangladesh Institute of Insurance Management (BIIM) and a national actuarial institute. IDRA is also expanding its technical capacity and manpower for enhanced monitoring.
Dr. Alam said several IT-related reforms are in progress, including operationalizing the Insurance Information Management System (IIMS). “Digitization is essential for ensuring transparency and accountability,” he noted, adding that the regulator currently lacks sufficient authority to fully enforce compliance. New distribution channels-such as bancassurance under the 2023 guidelines-are expected to improve service delivery through banks’ skilled workforce.
Economic analyst and Labaid Hospital Managing Director Sakif Shamim said the insurance industry has long remained stagnant due to lack of skilled manpower, outdated products, low profitability, and slow technological adoption. Delayed claim settlements, corruption, and fraudulent claims continue to erode public confidence.
He highlighted structural problems such as excessive licensing driven by political influence, which has resulted in too many companies competing in a limited market. Bangladesh’s claim settlement rate-slightly above 65 percent-lags far behind India’s 98 percent. Over one million customers await settlement of claims worth Tk 3,500 crore, while many companies face liquidity crises.
Shamim stressed that “mandatory digital transformation” is essential for revival. Automated claims, e-insurance, data analytics, microinsurance, agricultural coverage, and Islamic (Takaful) products could unlock significant growth, he said, while bancassurance could help rebuild trust.
Green Delta Insurance Managing Director and CEO Farzana Chowdhury said less than 1 percent of Bangladesh’s population is covered by insurance, reflecting enormous growth potential. She emphasized professional capacity-building, noting that Green Delta invests heavily in employee training at home and abroad.
The company has maintained strong financial health, offering an average 37 percent dividend over the past two decades and earning a reputation for fast claim settlement. Its digital insurance ecosystem and women-focused product “Nibedita” have expanded access across diverse groups.
Farzana said the sector’s future depends not on selling more policies but on “fulfilling promises, ensuring transparent and fast claim settlement, and improving customer experience through technology.” Rebuilding trust, she added, is the foundation for long-term stability and growth of the insurance industry.