Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The insurance regulator has put into effect a ban on agent commissions in the non-life insurance sector this month, effectively approving the removal of agents from the segment.
On Wednesday, the Insurance Development and Regulatory Authority (IDRA) reaffirmed the decision and conveyed it to all stakeholders.
As a result, none of the 45 non-life insurance companies will be allowed to deploy agents for premium collection.
In a press release issued on Wednesday, IDRA said it had scrapped agent licences to address the problems facing non-life insurers. The companies are no longer permitted to pay any commission, and any deviation from the directive would invite punitive action, the statement said.
In advanced economies, the non-life insurance sector is significantly larger than the life insurance segment.
According to IDRA's FY24 annual report, the non-life sector accounted for 59.80 per cent of total global insurance premiums in 2023, while the life sector collected the remaining 40.20 per cent.
In Bangladesh, however, the situation is reversed. In 2023, the life insurance sector collected premiums of Tk 123 billion, while the non-life sector collected only Tk 60 billion.
Earlier studies conducted by insurance companies, independent researchers, and IDRA found that insurers often paid uncontrolled commissions to secure a share of the relatively small market. This unchecked discounting and commission payment has also been identified as a key reason behind the country's low claim settlement ratio.
Bangladesh's non-life insurance companies settled only 35.54 per cent of total claims in 2023.
Why agent commissions have been abolished
IDRA's decision to abolish agent commissions in the non-life insurance sector marks one of the most significant regulatory shifts in recent years.
The move aims to correct long-standing structural weaknesses in the market, where excessive commission-driven business has frequently undermined underwriting discipline and policyholder protection
Industry insiders say commission-led growth has been a major contributor to distorted pricing, weak risk assessment, and delayed claim settlements in the sector. In many cases, insurers prioritised expanding premium volumes through high commissions rather than maintaining underwriting quality.
IDRA's intervention represents a structural reset for Bangladesh's non-life insurance sector. While the transition may be challenging-particularly for players dependent on commission-based business-the reform could lay the foundation for a more disciplined, sustainable, and policyholder-focused insurance market in the long term.
farhan.fardaus@gmail.com