Strong governance key to insurance sector reform: BB governor

Bangladesh Bank Governor Ahsan H Mansur yesterday said that without effective implementation of good governance, meaningful results cannot be achieved in the insurance sector, stressing that accountability must be ensured across regulators, insurers and all stakeholders.

He made the remarks while speaking as the chief guest at the launching ceremony of the Insurance Development and Regulatory Authority's (IDRA) new website and digital insurance manual at the BIAM Foundation auditorium in the capital.

Mansur said the central bank would provide necessary support from the banking sector, but warned that the market cannot be allowed to function without oversight.

"There are comprehensive governance conditions. If these conditions are not fulfilled, desired outcomes will not be achieved," he said, adding that while the market may move at its own pace, regulators will not allow it to operate independently without responsibility.

Highlighting long-standing weaknesses in the insurance industry, the governor said investment, accounting and premium collection had taken place in many cases, but customer liabilities were not being paid due to poor fund management. He instructed chief executive officers and chief financial officers of insurance companies to manage funds properly so that claims and liabilities can be met on time.

The programme was presided over by IDRA Chairman M Aslam Alam. Special guests included Kazi Sakhawat Hossain Lintu, vice-president of the Bangladesh Insurance Association, BM Yusuf Ali, president of the Bangladesh Insurance Forum.

Mansur formally unveiled the upgraded IDRA website and the digital insurance manual, describing the initiative as a crucial step in restoring discipline and transparency in the sector. 

He said reforms were the only way to rescue the insurance industry, which has long been plagued by governance failures, weak compliance and low public trust. 

He also noted that Bangladesh's insurance sector remains small relative to the size of the economy, limiting its contribution to GDP.

The governor said the government can take certain initiatives, but product development and market expansion largely depend on private-sector participation. He emphasised that insurance coverage can be extended to both movable and immovable assets, and urged coordinated efforts to expand the market, warning that without growth the sector would remain constrained.

He also called on insurers to actively provide data through the regulator's new digital platform, cautioning that digitisation would be delayed without proper information flow. 

Mansur encouraged insurers to move towards cashless transactions, saying reduced cash use would help increase government revenue. Bangladesh Bank, he added, would support this transition, while IDRA would prepare guidelines to ensure premiums are deposited through banks.

Concluding his speech, the governor said the sector had lost its way by prioritising short-term profits and must now be rebuilt as a productive and trustworthy industry.

IDRA Chairman M Aslam Alam said the digital insurance manual compiles all relevant laws, rules, regulations and circulars in an accessible format. Available as an e-book, HTML version and downloadable PDF, the manual is designed to be user-friendly. 

He said if reforms are implemented properly, the insurance sector could see significant progress within five years, but warned that failure to act would deepen existing problems.