Life insurers fail to pay Tk4,374cr in claims in 2024

Life insurance companies in the country failed to settle approximately 34% of claims in 2024, leaving outstanding payments of roughly Tk4,374 crore, according to data from the Insurance Development and Regulatory Authority (IDRA).

The total value of claims at the end of 2024 reached Tk13,014 crore. Of this, life insurers settled Tk8,593 crore, representing a settlement rate of 66.03%. This marks a decline from 2023, when the settlement ratio was 72.43%, with Tk8,728.90 crore settled out of a total outstanding amount of Tk12,051 crore.

The delays are causing trouble for many policyholders, some of whom have been waiting years for their rightful compensation after their policies matured.

The IDRA's figures are based on unaudited data from 36 public and private life insurance companies for 2024.

Industry insiders say the second half of last year was particularly challenging for the life insurance sector. Following widespread political and economic uncertainty, the sector was affected by growing mistrust — similar to what has been seen in the broader financial sector. 

Additionally, some life insurance companies failed to settle matured policies on time, further damaging public confidence and casting a negative light on the entire industry.

Mohammed Amdad Ullah, additional managing director of Chartered Life Insurance, told TBS, "The sector faced numerous challenges last year amid various crises. Despite these difficulties, we did our best to serve our clients."

However, he added, the overall perception of the life insurance sector has been negatively affected due to some companies failing to pay their customers on time. 

Sheikh Rakibul Karim, additional managing director and acting chief executive officer of Guardian Life Insurance, said, "In 2024, Guardian Life Insurance Limited settled over 158,000 insurance claims, disbursing a total of Tk439 crore. Notably, 95% of all claims were settled within just three working days." 

He further said, "Upholding a strict zero-tolerance policy, we remain committed to transparency, accountability, and operational excellence."

In late March, the IDRA held a governance review meeting with the directors of six life insurance companies. During the meeting, IDRA Chairman M Aslam Alam urged the companies to settle the outstanding claims of their policyholders without further delay.

These companies have already been flagged as high-risk entities, and the IDRA has repeatedly called on them to clear pending claims.

Md Solaiman, deputy director and spokesperson of IDRA, told this newspaper that the regulator has verified the issues and formally requested action plans from the six companies that have failed to adequately pay policyholders. He said many of these insurers have long-overdue matured policies that remain unsettled.

The IDRA has instructed the companies to submit a three-month claim settlement plan outlining how they intend to address their outstanding liabilities. "If they fail to implement these plans, the IDRA will take stricter action to ensure policyholders receive their rightful payments," Solaiman warned.

The six companies are: Fareast Islami Life Insurance, Baira Life Insurance, Golden Life Insurance, Sunlife Insurance, Sunflower Life Insurance, and Padma Islami Life Insurance.

The IDRA has asked each of them to provide a detailed plan specifying how much they can pay within the three months and to disclose whether they are facing any financial constraints that hinder timely payments. 

At the end of 2024, Fareast Islami Life Insurance, once a top premium earner in the industry, had a total claim liability of Tk2,947 crore. The company settled just 6.59% of claims.

Padma Islami Life Insurance has an even lower claim settlement rate. The company has pending liabilities of Tk262 crore, but paid only 4.49% of claims.

Baira Life Insurance had total claims of Tk84 crore, out of which Tk78 crore remains unpaid. The company settled only 7.42% of claims.

Sunflower Life Insurance had total claims of Tk599 crore, with Tk586 crore still outstanding. It has paid only 2.13% of claims.

Golden Life Insurance had total claims of Tk38 crore, with Tk37 crore still unpaid. The company settled only 2.18% of claims as of September 2024.