IDRA to launch special audits into 15 life insurers over financial, operational issues

The Insurance Development and Regulatory Authority (IDRA) has decided to conduct special audits into 15 life insurance companies to investigate financial distress, delayed claim settlements, and declining policyholder trust.

The companies under scrutiny are – Sunlife, Homeland Life, Padma Islami Life, Progressive Life, Protective Islami Life, Best Life, Prime Islami Life, Jamuna Life, Diamond Life, Swadesh Life, Sunflower Life, Fareast Islami Life, Golden Life, BAIRA Life, and NRB Islamic Life Insurance Ltd.

Letters notifying the firms were issued on Monday, and the audit process is set to begin soon.

According to the IDRA, the audits aim to uncover why these companies are failing to settle policyholders' claims. It also wants to find the reasons behind deteriorating life funds, falling premium income, rising policy lapses, and shrinking assets at these firms. 

The regulator also aims to identify individuals responsible for mismanagement and take appropriate regulatory actions.

Speaking to The Business Standard, Saifunnahar Sumi, media and communication consultant and IDRA spokesperson, said, "This initiative is essential to restore trust, ensure good governance, and uphold accountability in the sector."

"Some companies are in poor financial condition and unable to pay clients. The audits will identify the reasons for financial troubles and client harassment. Based on the audit findings, necessary action will be taken," she added.

In recent years, the life insurance sector has faced criticism for delayed claim settlements and poor customer service. 

IDRA said the audits are part of a broader effort to root out inefficiencies and identify irregularities and weaknesses in the life insurance sector, ensuring companies are properly managing policyholder funds.

It further said apart from deteriorating life funds and falling premium income, many companies' management expenses have increased abnormally. Inefficient investment strategies and weak portfolio management are also jeopardising their financial stability, the regulator stated.

According to unaudited financial data submitted to the IDRA, at the end of 2024, the combined assets of 35 life insurance companies in Bangladesh reached Tk48,559.90 crore, marking a Tk1,504.61 crore increase from the previous year.

Out of 36 licensed life insurers, all but Golden Life Insurance submitted their data. In 2023, Golden Life's reported assets were Tk55.86 crore.

The sector's total assets stood at Tk47,055.29 crore in 2023, up from Tk45,592.86 crore in 2022. 

IDRA data shows that 21 companies experienced asset growth in 2024, 13 posted declines, while newly licensed Shanta Life Insurance maintained stable assets.

According to unaudited 2024 data, MetLife Bangladesh remains the top life insurer in terms of assets, reaching Tk19,397.79 crore, up from Tk18,993 crore the previous year. The company settled claims worth Tk2,895 crore.

National Life Insurance reported assets of Tk6,797.64 crore in 2024, up from Tk6,066 crore in 2023. The company collected Tk2,101 crore in premiums and settled claims worth Tk1,184 crore during the year.

Analysts say the overall rise in assets reflects long-term potential, but poor performance by some companies and a lack of data transparency raise concerns about governance and accountability. 

According to the experts, life insurance companies in Bangladesh are facing increasing pressure on asset growth due to risky investments, high operational expenses, and delayed claim settlements.

The sector's assets, built primarily from policyholder premiums and investment returns, are invested in government and private bonds, equities, mortgages, and real estate. These investments, alongside cash value accumulation and dividends, typically help insurers build their capital base.

However, many companies are now struggling to maintain asset growth. Some have had to liquidate fixed deposits to pay off pending claims, reducing interest income and weakening their capital strength. 

Excessive commissions paid to agents, poor administrative cost controls, and intense market competition are also contributing to asset erosion, industry insiders said.

Experts stressed the need for prudent investment strategies, tighter expense management, and faster claim settlements to ensure sustainable growth.