Insurance sector reform must begin with settling Tk7,000cr claims: IDRA

Bangladesh's insurance sector is facing deep-rooted structural weaknesses, weak governance and declining public confidence, prompting calls from policymakers and industry leaders for stronger regulation, wider insurance coverage and comprehensive reforms.

The issues were highlighted at a seminar titled "Challenges, Prospects and the Way Forward for Bangladesh's Insurance Sector" organised by the Insurance Reporters Forum (IRF) today (27 June).

Speaking at the event, Prime Minister's Adviser on Finance and Planning Rashed Al Mahmud Titumir said many insurance companies lack strong asset management and investment capabilities, with the life insurance segment facing particularly serious challenges.

He stressed the need to expand agricultural and health insurance, noting that despite Bangladesh's vulnerability to natural disasters, crop insurance remains underdeveloped while health insurance coverage is largely confined to higher-income groups and salaried employees.

Titumir also called for greater use of technology to improve customer services and operational efficiency, saying weak regulatory oversight, poor accountability and declining public trust have become major obstacles to the industry's growth.

"The insurance sector needs a strong, effective and market-friendly regulatory framework to ensure accountability, protect policyholders and expand insurance coverage," he said.

Addressing the seminar, Insurance Development and Regulatory Authority (IDRA) Chairman Mir Nadia Nivin said restoring policyholders' confidence, establishing insurance as a major source of long-term investment and strengthening institutional capacity would be the regulator's three key reform priorities.

He said settling around Tk7,000 crore in outstanding insurance claims is IDRA's immediate priority.

The regulator will work with individual insurance companies to identify financial and operational weaknesses, recover trapped funds, facilitate asset sales where necessary and explore other measures to clear pending claims.

"If a significant liability remains after exhausting all available options, the government may be approached for a one-time bailout package," Nivin said, adding that insurers and the regulator must first complete their own reform initiatives before seeking government assistance.

He also announced plans to expand microinsurance through microfinance institutions, develop a regulatory framework for Islamic insurance (Takaful) and strengthen insurance education to build a skilled workforce.

Bangladesh Insurance Association President Saeed Ahmed, MP, said the insurance regulator should remain independent of business interests and called for expanding mandatory motor insurance and introducing new insurance products for emerging sectors.

Bangladesh Insurance Forum President BM Yusuf Ali said coordinated efforts by the government, regulator and insurance companies are essential to modernise the industry and make it more transparent and customer-friendly.

Professor Dr Md Shahidul Islam Jahid, chairman of the Department of Banking and Insurance at the University of Dhaka, identified weak regulation, poor governance and a short-term profit mentality as the sector's main challenges, while emphasising the need to expand agricultural and climate-risk insurance.

Zenith Islami Life Insurance Managing Director SM Nuruzzaman said the life insurance industry faces greater challenges than the general insurance sector and called for easier asset disposal procedures and improved access to bank financing.

Presenting the keynote paper, Monir Hossain said modernising the insurance industry, strengthening governance, accelerating digitalisation and ensuring customer-centric services are essential to support Bangladesh's growing economy.