The Insurance Development and Regulatory Authority (IDRA) has made settlement of long-pending insurance claims its top priority, as the new leadership seeks to restore public confidence in Bangladesh's troubled insurance sector.
The regulator also plans a sweeping reform programme that includes liquidating assets of financially distressed insurers to repay policyholders, curbing illegal commission practices, introducing risk-based supervision, making unique policyholder IDs mandatory, and taking legal action against corruption and financial misconduct.
Speaking at a media briefing on Thursday, IDRA Chairman Mir Nadia Nivin said rebuilding trust in the insurance industry begins with paying outstanding claims.
"The first priority is to start settling pending claims as quickly as possible. Once policyholders begin receiving their dues, confidence in the sector will gradually return, making it easier to stabilise the industry," she said.
The chairman disclosed that IDRA has held separate meetings over the past two weeks with the owners and chief executive officers of the seven most financially distressed insurance companies. The regulator reviewed their assets, investments and financial positions, while ordering fresh valuations where asset values appeared questionable.
Under the recovery plan, proceeds from the sale of land, government treasury bonds, investments and other assets will be deposited into separate bank accounts for each company under auditor supervision. Claims will then be settled on a first-in, first-out (FIFO) basis, ensuring that the oldest claims are paid first.
According to the chairman, the insurance sector currently has around Tk 70 billion in outstanding claims, of which nearly Tk 45 billion is concentrated in just seven companies. The initial reform drive will therefore focus on these firms.
IDRA has identified four major sources for raising funds to settle claims: fixed deposits with financially sound banks, government treasury bonds, marketable land and other investments. Deposits stuck in troubled banks will be addressed in consultation with Bangladesh Bank.
Crackdown on hidden commissions
The regulator also intends to eliminate excessive and concealed commission payments, which continue despite existing restrictions.
The chairman said commissions are often disguised as salaries or paid through various contractual arrangements. IDRA is working on mechanisms to detect and prevent such practices, with visible enforcement measures expected within a month.
Risk-based supervision
IDRA is moving away from its traditional compliance-based regulatory framework to a risk-based supervision model.
The chairman said financial reports submitted to the regulator are often outdated, making it difficult to assess insurers' actual conditions. Under the new framework, companies will be monitored using more frequent and up-to-date financial information, allowing regulators to identify risks and intervene at an earlier stage.
Mandatory unique policyholder ID
To strengthen consumer protection, IDRA plans to introduce a mandatory unique policyholder identification system.
Every valid insurance policy will generate a unique ID sent directly to the policyholder's registered mobile phone. The regulator also plans nationwide awareness campaigns advising customers not to pay premiums if they do not receive the verification ID.
Tougher verification of executives' credentials
Responding to allegations of fake academic credentials among senior insurance executives, the chairman said IDRA would tighten verification procedures.
Future checks may include verification through universities, international databases, Bangladesh Bank and credit information sources before approving senior appointments.
Legal reforms under consideration
Asked whether fines imposed on weak insurance companies could be recovered from directors personally, the chairman said the existing law does not permit such action, although policy discussions on the issue are ongoing.
Regarding allegations of fund embezzlement, she said IDRA would first focus on settling policyholders' claims and stabilising the sector. Legal action would then be taken wherever evidence of financial fraud or misappropriation is established, alongside efforts to recover misused funds.
Staffing shortage remains a challenge
The chairman acknowledged that manpower shortages remain a major obstacle for the regulator. Although previous initiatives sought to expand staffing, government recruitment restrictions have limited progress.
IDRA is therefore exploring alternative ways to strengthen inspections and field-level supervision.
She stressed that restoring discipline in the insurance sector would require coordinated efforts from the regulator, the government, other supervisory agencies, insurance companies and the media.
"The immediate objective is to restore policyholders' confidence. Once that is achieved, broader reforms will follow to ensure a healthy and disciplined insurance sector," she said.
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