68% of claims unpaid in non-life insurance sector, policyholders in distress

Insurance companies in the non-life sector are failing to settle around 68% of the claims, resulting in outstanding claims amounting to approximately Tk2,635 crore by the end of 2024. As a result, many policyholders are suffering, unable to receive their rightful compensation.

This information was obtained from the Insurance Development and Regulatory Authority (IDRA), based on unaudited data from 46 public and private non-life insurance companies for the year 2024.

In comparison, in 2024, total claims amounted to TK3,871.92 crore, while only Tk1,237.40 crore (32%) was settled.

In 2023, the total claims in the non-life insurance sector stood at Tk3,582.89 crore, of which only Tk1,481.63 crore (41%) was paid.

IDRA has stated that actions will be taken against companies with poor claim settlement rates. A governance review meeting with the directors of those companies will soon be convened.

Md. Solaiman, Deputy Director and spokesperson of IDRA, told The Business Standard, "One of the main reasons cited by companies for non-settlement is that Sadharan Bima Corporation (SBC), the state-owned reinsurer, fails to settle their share of claims on time. As a result, insurers are unable to clear a significant portion of claims themselves."

He added, "IDRA has already informed SBC about the issue. The new leadership at SBC is now working to reduce this gap."

Industry insiders say that the delay in claim settlements has been causing prolonged suffering for policyholders, many of whom face severe financial hardship due to unpaid compensation. 

Although insurance law requires claims to be settled within 90 days, this rule is often not followed—according to those involved in the sector.

Insurance companies argue that they are legally required to reinsure 50% of their non-life policies through SBC. While the remaining 50% can be reinsured with foreign companies, SBC's delays in settling their share are preventing insurers from paying policyholders on time.

However, some companies, in order to protect their reputation, pay claims from their own funds.

They further noted that foreign reinsurance companies usually settle claims promptly, unlike SBC, which frequently delays payments.

On the other hand, SBC has informed IDRA that delays often occur due to incomplete documentation and non-receipt of premiums in a timely manner from the insurers.

Khawja Manzer Nadeem, Managing Director of United Insurance, said, "We prioritise claim settlement in line with the law. However, many policyholders delay in providing necessary documents, which causes settlement delays. 

"Also, reinsurance through SBC often takes time due to additional documentation outside the checklist, which customers fail to provide on time. In some cases, even claims with paid premiums remain pending for a long time, forcing insurers to use their own funds for payouts."

A senior official at the Bangladesh Insurance Academy, requesting anonymity, said, "It is not reasonable to expect claim settlements where premiums haven't been paid. Also, many claims are tied up in ongoing court cases, causing further delays."

He added that although there are various reasons behind customer suffering, a coordinated discussion among all parties is needed to find a solution. If this happens, he believes, the overall claim settlement rate will improve significantly.