BSEC raises red flags over audit findings at 27 listed insurers

The Bangladesh Securities and Exchange Commission (BSEC) has expressed serious concern over audit observations made in the latest audited financial statements of 27 listed insurance companies, warning that the issues could undermine investor confidence and market transparency.

Based on a detailed review of the annual audited financial statements for the year 2024, the capital market regulator has formally requested the Insurance Development and Regulatory Authority (IDRA) to take appropriate regulatory measures against the identified companies in accordance with applicable laws and regulations.

According to BSEC, statutory auditors of the listed insurance companies issued various critical observations, including Adverse Opinions, Qualified Opinions, Emphasis of Matter, Going Concern threats, and Material Uncertainty in their audit reports. The Commission noted that such opinions are not routine and often indicate serious weaknesses in financial reporting, corporate governance, and risk management practices.

BSEC believes these audit observations may adversely affect investors' interests, the transparency of financial disclosures, and overall confidence in the capital market – particularly in a sector that handles long-term liabilities and public trust.

The insurance companies flagged by BSEC include Asia Insurance, Asia Pacific General Insurance, Bangladesh General Insurance, Central Insurance, Continental Insurance, Desh General Insurance, Dhaka Insurance, Eastern Insurance, Federal Insurance, Green Delta Insurance, Islami Commercial Insurance, Islami Insurance Bangladesh, Janata Insurance, Meghna Insurance, Northern Islami Insurance, Paramount Insurance, Phoenix Insurance, Prime Insurance, Republic Insurance, Rupali Insurance, Sonar Bangla Insurance, Sikder Insurance, Standard Insurance, Union Insurance, Delta Life Insurance, Popular Life Insurance, and Sunlife Insurance.

In a formal letter sent to the Chairman of IDRA by its Corporate Reporting Department, BSEC stated that audit observations related to going concern risks and material uncertainty are of particular concern, as they directly question the companies' ability to continue operations and meet policyholder obligations.

The commission emphasised that ensuring the credibility of financial reporting and safeguarding the integrity of the insurance sector require swift and effective regulatory intervention by IDRA, the primary regulator of insurance companies.

BSEC noted that it is closely monitoring the audited financial statements of all listed companies to protect investor interests and maintain market stability. It believes that timely regulatory action by IDRA – such as enhanced supervision, special or forensic audits, and enforcement of corrective measures – would help strengthen financial discipline and governance within the insurance sector.

Experts believe the coordinated actions of BSEC and IDRA present a critical opportunity to address long-standing weaknesses in the insurance sector. If corrective measures are implemented effectively, the sector could regain credibility, strengthen investor confidence, and become more sustainable and investment-friendly in the long term.

Currently, 82 insurance companies are operating in the country. Of these, 58 companies are listed on the stock market, representing a significant portion of the insurance sector. Among the listed companies, 43 are non-life (general) insurance companies, while 15 are life insurance companies.