Decades lost in courtrooms, insurance claims still out of reach

Highlights

• 714 insurance claim cases worth Tk3,650 crore await High Court verdicts.
• HC upheld Idra's award for Famous Enterprise's fire claim.
• Some insurance disputes have remained unresolved for over 40 years.
• Insurers often delay or deny valid insurance claims.
• Experts blame weak Idra oversight for prolonged claim disputes.
• Court delays prevent policyholders from receiving timely compensation.

Infographic: TBS

Chattogram-based electrical goods wholesaler Famous Enterprise took out a risk insurance policy with Mercantile Insurance to cover its business, with stock insured for Tk8.25 crore.

On 29 November 2015, a fire ripped through its warehouse and showroom, destroying inventory.

The company immediately notified the insurer and its financing bank.

Mercantile Insurance appointed two firms to investigate the incident and assess the losses.

Their independent investigation and audit reports both put the damage at Tk5.09 crore.

Despite the findings, the insurer refused to settle the claim.

Famous Enterprise then filed a complaint with the Insurance Development and Regulatory Authority (Idra). On 11 April 2017, Idra's Arbitration Board ordered Mercantile to settle the claim, along with interest at the prevailing scheduled bank lending rate.

Mercantile challenged the arbitration award before the High Court. After prolonged hearings, the High Court, on 17 June this year, upheld the Idra Arbitration Board's decision.

The court also ordered the insurer to pay an amount equivalent to scheduled bank lending interest on the Tk5.09 crore from the date of the Idra ruling until the date of the High Court judgment. The insurer has been directed to make the payment within 60 days.

However, Aminul Islam, lawyer for Mercantile Insurance, told The Business Standard that the company would appeal the High Court verdict before the Appellate Division.

Famous Enterprise lawyer Mohammad Tanvir Nahiyan said the High Court verdict took nearly a decade, after more than two years had already been lost to procedural delays.

"It is difficult to predict how long the Appellate Division will take to dispose of the appeal," he said. "Famous Enterprise obtained insurance lawfully and paid its premiums regularly. Yet Mercantile continues to withhold the compensation on various grounds."

This case reflects a broader pattern of insurance disputes dragging through the courts.

As of 30 June 2026, 714 cases involving fire, risk and marine insurance claims were pending with the High Court, according to Supreme Court data. The cases include lawsuits filed by policyholders seeking insurance payouts and by insurers attempting to block those claims.

Of the total, 256 cases were filed by policyholders, while 458 were brought by insurance companies. Together, the cases involve insurance claims worth around Tk3,650 crore.

Many have remained unresolved for years. A total of 139 cases have been pending for more than 12 years, while 321 have remained before the High Court for over 10 years. Another 146 have been pending for more than five years, and 312 for less.

At the Appellate Division, 145 appeals against High Court judgments are awaiting disposal. These appeals involve claims of Tk1,800 crore, with some cases dating back over 40 years.

Waiting for over four decades

In 1979, Chattogram businessman Md Mohsin Khan bought a two-year Tk11 lakh policy from Sadharan Bima Corporation to cover a consignment of bamboo for export to Sweden.

In mid-1980, the bamboo was stored at the Chhayabithiwarehouse in Chattogram under the supervision of Janata Bank while export formalities were being completed.

Severe storms and flooding on 5-6 June 1980 inundated the warehouse, damaging the entire consignment. Mohsin filed a Tk11 lakh insurance claim. Although the insurer surveyed the loss, it refused to pay, prompting him to file a case in a Chattogram court later that year.

At the insurer's request, the court referred the dispute to arbitration in 1981. The Arbitration Board awarded Mohsin Khan the full claim with accrued interest.

Sadharan Bima challenged the award in the High Court in 1982, but the court upheld the decision and ordered payment of the insured amount plus interest.

The insurer then appealed with the Appellate Division. In 1988, the apex court also upheld the ruling and directed Janata Bank to calculate the total amount due, including compound interest from 1980 to 1988, and submit it to the Chattogram court for execution.

Nearly four decades later, Mohsin Khan says he has yet to receive a single taka.

"I am now nearly 80 years old. I no longer have the energy to keep going to court," he said. "I have given up hope of ever receiving the money."

Claims become trapped in legal limbo

Banking and insurance law expert Imran Ahmed Bhuiyan said Idra was established in 2011. Policyholders can lodge complaints with the regulator if disputes arise over claims.

Idra's Arbitration Board hears such disputes and issues rulings. Those decisions can be challenged in the High Court, while verdicts can in turn be appealed.

"The process often takes 10 to 15 years to complete," said Imran. "Even when the Appellate Division rules in favour of policyholders, insurers delay implementing the judgment."

He added, "Some make a partial payment and then stop, while many businesses eventually abandon the legal battle because of the time, cost and damage to their operations."

Before Idra was formed, insurance disputes were filed in lower courts, which typically referred them to arbitration boards for resolution. Many of those cases dragged on for decades, with some remaining unresolved for more than 30 years, he added.

Imran said risk insurance, fire insurance and coverage against accidental damage, natural disasters and theft are mandatory for businesses engaged in manufacturing, trade and import-export activities. Banks also require borrowers to obtain risk or fire insurance.

Similarly, marine or cargo insurance is compulsory for goods shipped by sea or air for export.

"With the exception of a handful of insurers, most companies regularly collect premiums from customers but fail to honourclaims when losses occur," Imran said.

Mohammad Iqbal Chowdhury, CEO at LafargeHolcimBangladesh, said multinationals like his typically insure with well-established insurers and therefore have not faced such problems.

However, he said complaints about Bangladesh's insurance sector are common. Insurers often try to avoid settling legitimate claims, while some policyholders also attempt to extract benefits beyond their actual losses. Both practices undermine trust in the system.

"Insurance plays a vital role in attracting foreign investment and supporting both local and international businesses," he said. "Bangladesh needed to build a genuine insurance system in which insurers strictly comply with their obligations and policyholders viewed insurance as compensation for losses rather than a source of financial gain."

He added that delays in resolving commercial disputes discourage investors, particularly foreign direct investment, regardless of the nature of the case.

"The World Bank's Ease of Doing Business assessments have consistently highlighted the time required to settle disputes in Bangladesh," he said, adding that the government and relevant stakeholders must find practical ways to speed up the resolution of commercial disputes.

What experts say

Under the law, insurers must settle or reject claims in 90 days of receiving all required evidence, said corporate and insurance law expert Md Mustafizur Rahman.

If an insurer fails to settle a valid claim within that period without reasonable cause, it is legally required to pay compensation for the delay by adding interest above the prevailing bank rate to the claim amount, said Mustafizur.

"In practice, the reality is the opposite," he said. "Forget delayed-interest compensation, many can't even recover the principal amount. Idra neither conducts effective oversight nor takes exemplary action against insurers that repeatedly violate the law."

It is entirely Idra's responsibility to ensure transparency and accountability among insurers, he said. "However, the regulator has failed to establish itself as an effective and independent watchdog, leaving policyholders to bear the consequences."

Mustafizur added that many insurance companies are controlled by influential business figures who often fail to meet their legal and ethical obligations to policyholders.

"Because of weak oversight, they rarely face accountability. While a handful of insurers honour claims, many others don't, forcing customers into lengthy legal battles," he added.

What Idra says

Mir Nadia Nivin, chairman of Idra, told The Business Standard that delays often begin with surveyors, who can take months to submit damage assessment reports after an insured loss.

"Even after survey reports are filed, insurers often delay or deny claims on various grounds. While Idra's Arbitration Board usually resolves complaints quickly, its decisions are often challenged in the higher courts, where cases can remain pending for years. As a result, policyholders are unable to recover their claims promptly," she said.

Nivin said Idra had no control over court proceedings but was working to reduce delays in insurance dispute resolution.

"We are strengthening accountability across life and non-life insurers by assessing their financial health and taking steps to speed up settlement of outstanding claims," she said.