The Insurance Development and Regulatory Authority (IDRA), the insurance regulator, has proposed merging life insurance firms instead of liquidating them due to their fragile financial condition.
According to The Financial Express, some insurance companies have not made efforts to bolster their financial standing, as noted by the IDRA. Sources within the IDRA indicated that the regulator highlighted in a recent report to the Financial Institutions Division of the Finance Ministry that the failure to settle insurance claims by certain companies has led to a “lack of trust among the public in the insurance sector.”
Reportedly, six life insurance companies collectively owe BDT26.81 billion ($244.3 million) in unpaid claims.
“The inability to settle insurance claims resulted from mismanagement, poor investments, financial irregularities, and misappropriation of funds by these companies,” stated the report, signed by IDRA director SM Masudul Haque.
Sheikh Kabir Hossain, president of the Bangladesh Insurance Association, suggested potential measures to assist struggling insurers, such as injecting funds into them or appointing administrators.
Expressing concerns over the liquidation of insolvent insurance firms, Hossain questioned which stakeholders would be responsible for settling claims for policyholders.
Currently, Bangladesh has a total of 74 insurance companies operating, including 41 life insurers and 33 non-life insurers.
