IDRA seeks claims settlement plans from 6 life insurers
They have paid less than 5% of their total claims
The Insurance Development and Regulatory Authority (IDRA) has asked six life insurance companies to submit a clear plan for settling pending claims, as they have failed to pay their policyholders or customers.
The companies – Fareast Islami Life Insurance, Baira Life Insurance, Golden Life Insurance, Sunlife Insurance, Sunflower Life Insurance, and Padma Islami Life Insurance – have been instructed to submit this plan within 10 working days.
The IDRA has requested a three-month action plan from these companies, specifying how much they can pay within this period and whether they are facing any financial difficulties.
Keep updated, follow The Business Standard's Google news channel
In late March, the IDRA held a governance review meeting with the directors of these six insurance companies. During the meeting, IDRA Chairman M Aslam Alam urged the companies to settle the outstanding claims of their policyholders without delay.
These companies have already been flagged as high-risk entities, and the IDRA has repeatedly urged them to pay pending claims. However, past warnings have failed to produce significant results.
IDRA Deputy Director and Spokesperson Md Solaiman told TBS that the six life insurers have paid less than 5% of their total claims. The IDRA has verified this information and has demanded an explanation from the companies about why they have not been paying policyholders.
If they fail to execute their submitted plans, the IDRA will take stricter actions to ensure policyholders get their money back, he said.
However, the exact amount of claims they settled has not yet been disclosed.
Claims settlement very poor
Data from the third quarter of 2024 (up to September) shows that Fareast Islami Life Insurance Ltd, once a top premium earner in the industry, had a total claim liability of Tk2,346 crore. However, Tk2,311 crore remains unpaid, with the company settling just 1.49% of claims.
Previously, the Bangladesh Securities and Exchange Commission (BSEC) conducted a special audit after receiving complaints about unpaid claims. The audit revealed that Fareast's former chairman and directors had embezzled Tk2,100 crore between 2010 and 2020.
In September 2022, Fareast Islami Life Insurance sold several properties to pay policyholders' claims, which had been overdue for years. However, the company still failed to meet its obligations.
On Thursday, Fareast Islami Life Insurance's share price closed at Tk34.20 on the Dhaka Stock Exchange (DSE).
Padma Islami Life Insurance has an even lower claim settlement rate. The company has pending liabilities of Tk229 crore but has paid only 0.81% of claims.
On Thursday, Padma Islami Life Insurance's share price closed at Tk24.10 on the Dhaka Stock Exchange.
Sunlife Insurance settled 10.42% of claims by the third quarter of 2024. However, IDRA sources indicate that the company's claim settlement rate dropped significantly in the last quarter. As of September, Sunlife had Tk56 crore in pending claims. Sunlife Insurance's share price closed at Tk70.70 on Thursday.
Baira Life Insurance had total claims of Tk66 crore, out of which Tk65 crore remains unpaid. The company has settled only 1.54% of claims.
Sunflower Life Insurance had total claims of Tk146 crore, with Tk144 crore still outstanding. It has paid only 1.19% of claims.
Golden Life Insurance had total claims of Tk38 crore, with Tk37 crore still unpaid. The company settled only 2.18% of claims.
