Kathmandu. The government is preparing to adopt the “Insurance Resolution Ordinance 2025” to maintain the credibility of the general public towards the insurance sector of Bangladesh, which is caught in the quagmire of opacity and corruption.
According to the proposed ordinance, if irregularities and corruption are found, the license of the insurance company will be canceled, the property of the director and the top manager will be confiscated, a fine of up to Rs 10 million and a jail term of up to seven years.
There is also a provision to invest more capital through existing shareholders or new shareholders in a financially distressed company.
The new law will allow the regulator to transfer the insurer’s shares, assets and liabilities to third parties.
According to The Business Standard, the Insurance Development and Regulatory Authority, the regulatory body of the insurance sector, will also have the right to remove or replace the chairman, director, chief executive officer, chief management employee or any other officer or employee of the insurer of the insurance company.
The ordinance for the insurance sector will protect the interests of customers in the sector. In addition, measures have been taken for the structural development of insurance companies.
The draft states that the main objective of the ordinance is to maintain the stability of the financial system including payment, settlement and liquidation system of insurance companies.
It also aims to protect the interests of customers, maintain important activities of insurance companies, protect government funds by deducting subsidies, prevent falling asset prices of insurance companies, and minimize losses to lenders and maintain public trust in the financial system.
The terms of resolution can also be applied to Islamic insurance companies. However, the authority will have to formulate rules in this regard.
One or more bridge insurance companies will be established, so that the problematic company or shares can then be sold to third parties. Through the ordinance, the authority will be able to take a decision to temporarily bring the ownership of any insurance company into government ownership.
The ordinance also includes provisions for the formation of a Consumer Protection Fund and compensation to shareholders and lenders.
It also refers to the formation of a council for crisis management in the region. The Council will work to address systemic and natural crises and other crises in the insurance sector.
The regulatory authority will also have the power to terminate insurance companies headquartered outside Bangladesh. Apart from this, insurance companies will also have the opportunity to choose voluntary liquidation.
A recent investigation by the AUTHORITY has found that six of the licensed life insurers have not been able to return the insured’s money. As of December 2024, these companies owed a total of 37.76 billion Bangladeshi taka (rupees) to customers. There are many other insurance companies whose financial condition is also very weak. At present, around 1.1 million insurers are not getting back their dues from insurance companies.
