Kathmandu. The rate of claim payment in Bangladesh’s insurance sector has been declining steadily over the past few years. The latest picture of Bangladesh’s insurance sector lacking institutional good governance and transparency has further undermined the confidence of the insured in the insurance industry, which already lags behind global standards.
According to the Insurance Development and Regulatory Authority, in 2024, only 57 percent of insurance claims have been cleared. This is a significant decline from 65 percent in the previous year.
In terms of monetary terms, insurers paid Rs 94.76 billion against the total claims of Rs 164.84 billion last year. In this, the claim payment condition of the life insurer was slightly better than that of the non-life insurer. Payment rates for life insurance policies have come down from 72 per cent to 65 per cent. Similarly, non-life insurance claims have fallen from 41 per cent to 32 per cent.
Globally, the average claim payment rate is around 97-98 percent. In neighbouring India, the claim payment rate in the financial year 2022-23 averaged 98 per cent.
Currently, there are 36 life insurance companies and 46 non-life insurance companies operating in Bangladesh. Golden Life Insurance is yet to submit its data to the regulator. According to the Insurance Act 2010, the insurer has to settle the claims within 90 days of receiving all the necessary documents after the maturity of the policy.
Due to irregularities and corruption in six life insurance companies, the claim payment rate is less than 10 percent. This has had a serious negative impact on the life insurance sector.
The insurance regulator has asked these six insurers – Baira Life Insurance, Forest Islami Life Insurance, SunLife Insurance, Sun Life Insurance, Sunflower Life Insurance, Padma Islami Life Insurance and Golden Life Insurance – to submit detailed action plans on how to improve their claim payment rates.
Most insurers have reinsured their policies with the state-owned reinsurer, the General Insurance Corporation, but many claims are uncertain because insurers have not been able to submit the required research report. Meanwhile, Golden Life Insurance is struggling with a severe cash crunch, unpaid claims and an operation breakdown. Around 18,000 insurers are still waiting for their claims to be paid. Four companies failed to cross the 10 percent mark, while 11 crossed 30 percent, and nine crossed 50 percent.
