Thirty-one out of 36 (or more than 85%) life insurers have accumulated outstanding claims amounting to BDT36.43bn ($305m) over the past five years, according to data from the Insurance Development and Regulatory Authority (IDRA).
The unpaid claims, due to 1.1m policyholders, were accumulated over five years until the second quarter of 2024 and represented 66.21% of the total claims during this period, reported the newspaper, The Daily Star.
IDRA data also show that the claim settlement rate among life insurers fell from 85% in 2020 to 72% in 2023.
Officials and experts say that poor investment decisions, high agency commissions, excessive management costs, and unhealthy competition are to blame for the situation.
An industry expert says that Bangladesh has more insurance companies than it needs. Excessive competition and a lack of management expertise.
IDRA spokesman Mr Zahangir Alam told The Daily Star that the regulator has two major options — appoint administrators or cancel the licences of errant insurers. But cancelling licences is seen as a harsh measure.
He said instructions have been given to recover unpaid claims by taking legal action against the directors who were involved in financial irregularities. IDRA has also appointed observers to several insurers with the worst settlement record. These insurers are also being pressured to secure new funding or dispose of assets.
Bangladesh has over 80 insurance companies, including 36 life insurers.