Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The insurance regulator-IDRA--has submitted its much-hyped draft ordinance to the Ministry of Finance, seeking sweeping new powers to intervene in the governance of troubled insurers.
The proposed ordinance is to empower the IDRA (Insurance Development and Regulatory Authority) to set into any company board and reconstitute it where serious governance failures are identified, officials familiar with the development told the FE on Thursday.
According to them, the draft ordinance was sent to the financial institution division under the Ministry of Finance (MoF) just a couple of days back.
The finance ministry is expected to review it in the coming weeks, they mentioned.
Besides, malfunctioning insurance firms may also face merger or liquidation under the new reform recipe of the interim government, hot on the heels of the banking-sector overhaul drive.
Sources said the insurance regulator has finalised the Insurer Resolution Ordinance 2025, paving the way for sweeping reforms in the insurance sector the way the banking-sector problems are being fixed, starting the mergers of five hollowed Islamic banks into a big one.
The IDRA, which oversees 82 life and non-life insurance companies, finalised the draft law in consultation with industry stakeholders.
Once it comes into being, the law will empower the authority to appoint administrators to troubled insurers, dissolve their boards, and transfer viable portfolios to newly created bridge entities.
The main objective of the move under the post-uprising regime is to "protect policyholders' interests and restore confidence in the country's insurance sector".
Also the proposed ordinance is to authorise the regulator to recover assets misappropriated through unauthorised means.
To enforce the proposed law, the IDRA plans to establish a dedicated resolution cell.
A special 'fund-comprising contributions' from the government and development partners, including the World Bank's International Development Association (IDA), the Asian Development Bank (ADB), the International Bank for Reconstruction and Development (IBRD) and the Islamic Development Bank (IsDB), would be created to support the resolution process.
Modelled on Bangladesh's bank-resolution mechanism introduced by the interim government, the ordinance would grant the IDRA broad authority to intervene in financially distressed firms, transfer their assets and liabilities, or establish bridge insurers to safeguard policyholders.
According to the industry insiders, the move can be a turning point for a sector where several life insurers have been accused of failing to settle maturity claims and eroding public trust.
While non-life insurers are considered financially stronger than that of life ones, both segments would fall under the purview of the proposed ordinance.
Bangladesh's insurance penetration remains among the lowest level in South Asia, hampered by chronic delays in claim settlement, opaque practices, and weak corporate governance.
At present, a total of 46 non-life and 36 life insurance companies are operating in Bangladesh under the IDRA's supervision.
jasimharoon@yahoo.com