Profit rises, but 89% of non-life insurance claims remain unpaid

Non-life insurance companies are reporting higher profits despite a major weakness in the sector, sluggish customer claim settlements, with nearly 89% of total claims remaining unpaid as of March 2026.

Of the 43 listed non-life insurers, 41 have published their financial results for the first quarter of 2026. Of these, 33 reported year on year growth in profits, while eight posted lower profits.

Industry insiders attributed the improvement in profitability mainly to the removal of individual agent commissions from 1 January, lower operating and management expenses and, for some insurers, higher marine insurance business and investment income.

However, the rise in profitability has yet to translate into faster claim settlements, leaving a substantial portion of policyholders' claims unpaid.

Nearly 89% of claims remain unsettled

According to the latest data from the Insurance Development and Regulatory Authority (IDRA), non-life insurers received claims amounting to around Tk3,798 crore up to March 2026. Of this, only 11.3% was settled, leaving Tk3,369 crore, or 88.7%, unsettled. This means insurers settled only around Tk11.30 for every Tk100 in claims received.

The situation was particularly severe at several insurers. Unsettled claims accounted for 99.85% of total claims at Dhaka Insurance, 99.79% at Bangladesh Cooperatives Insurance, 98.86% at Northern Islami Insurance, 98.29% at Asia Pacific General Insurance and 98.27% at Peoples Insurance.

Lower costs boost profits

Khawja Manzer Nadeem, adviser to United Insurance Company, told TBS that the general insurance business performed well during January-March.

He said the removal of individual agent commissions, higher premium income and lower operating costs contributed to the company's profit growth.

Performance, however, varied across insurers, with some companies achieving greater cost reductions while others benefited from stronger marine insurance business, he said.

The government stopped individual agent commissions in the non-life insurance sector from 1 January 2026, reducing costs for insurers.

Documentation, liquidity among key obstacles

Industry stakeholders cited several factors behind the slow settlement of claims, including incomplete documentation, delays in reinsurance recovery, liquidity constraints, weak financial capacity, corporate governance and internal control weaknesses, disputed claims and ongoing legal cases.

Khawja Manzer Nadeem said claims can often be settled within 15 to 20 days when policyholders submit complete documentation.

However, he said some policyholders submit only the initial claim application and fail to provide additional information or documents requested by insurers. As a result, some claims remain pending for years.

He also said many customers lack sufficient awareness of insurance procedures and fail to properly preserve policy-related documents.

Officials of Sadharan Bima Corporation said claims can also take longer to settle when necessary documents are unavailable or submitted late.

They said claims generally require verification of the extent of loss, policy terms, the cause of the cause of the incident and other supporting documents.

Reinsurance recovery adds pressure

Reinsurance is another factor affecting the timing of claim payments.

Non-life insurers typically reinsure part of large risks. Following a major loss, an insurer may first have to pay the policyholder and subsequently recover the reinsurer's share.

Delays in recovering reinsurance proceeds can therefore put additional pressure on an insurer's cash flow and affect its ability to settle claims promptly.

Higher profit does not guarantee claim-paying capacity

Industry experts said reported profit alone does not necessarily indicate an insurer's ability to settle outstanding claims.

An insurer's actual claim-paying capacity also depends on its liquidity position, investment portfolio, solvency position, reinsurance recoverable and the quality of its outstanding claims management.

Weak asset management, investment-related problems, internal control deficiencies and prolonged disputes can therefore continue to affect claim settlement even when an insurer reports higher profits.

IDRA prioritises outstanding claims

The issue has also emerged as a major priority for the insurance regulator.

IDRA Chairman Mir Nadia Nivin has said settling around Tk7,000 crore in outstanding insurance claims is one of the authority's priorities.

Seven financially weak insurers alone have around Tk4,000 crore in outstanding claims, according to the regulator.

The IDRA chairman has also indicated that some assets and investments may need to be sold to gradually settle valid claims.

The broader insurance sector has 82 insurers, including 36 life and 46 non-life companies. A total of 58 insurers are listed on the stock exchanges.

While improved profitability may strengthen insurers' financial positions, industry stakeholders say faster settlement of valid claims remains critical to restoring policyholder confidence in the non-life insurance sector.