Lack of Trust, Weak Management Hinder Insurance Sector’s Potential

Insurance companies collect money from people year after year with the promise of standing by them in times of crisis. But when such a crisis actually occurs, if customers have to wait for years to receive their dues, trust in the entire system collapses. Bangladesh is now facing such a reality. Unsettled claims in the life and general insurance sectors amount to nearly Tk 7,000 crore. Although the country’s economy is close to $450 billion, the insurance market accounts for only 0.33 percent of GDP, according to an analysis by the private research organisation Centre for Strategic and Economic Research (CSER).

The organisation says limitations in insurance products, weak distribution systems and a lack of awareness are among the reasons the sector has failed to grow in line with the economy.

However, the biggest obstacle is the crisis of customer confidence. Finance and Planning Minister Amir Khosru Mahmud Chowdhury has recently taken a firm position on the issue. He said legitimate claims must be paid within a specified period. If a company lacks sufficient cash, it should sell land or other assets if necessary to pay policyholders their dues. His remarks have made the government’s priority clear: restoring trust is the first condition for expanding the insurance market.

The finance minister said no company should be allowed to retain assets or make new investments without paying claims. He said irregularities, disorder and corruption have become deeply rooted in the insurance sector. Customers buy policies with their hard-earned money for future security, but failure to receive claims destroys trust in the entire system. Against this backdrop, the government has taken initiatives to amend the Insurance Act 2010 and establish a crisis-resolution framework to address the sector’s crisis.

Meanwhile, although the finance minister is considering various initiatives to revive the insurance sector, there are widespread allegations against Insurance Development and Regulatory Authority (IDRA) Chairman Mir Nadia Nivin. Questions have also been raised about her qualifications and experience for the post. Allegations have also surfaced that she has been disregarding laws, rules and regulations through abuse of power and that the Insurance Act and relevant regulations were violated in appointments to various positions. There are also allegations regarding the use of the controversial “walk-in interview” system.

It has also been alleged that Mir Nadia Nivin enjoyed the patronage of Hafiz Ahmed Majumder, former Awami League lawmaker from Sylhet-5 and chairman of Delta Life Insurance under the previous Awami League government.

According to the allegations, she became an independent director of Delta Life Insurance as an associate of the Awami League. Since joining IDRA, she has allegedly been pursuing the agenda of a particular group and attempting to retain her position by flattering senior government officials. She has also been accused of taking official files home.

Dissatisfaction has reportedly grown among IDRA officials and employees over Nadia Nivin’s alleged lack of qualifications and suitability for the post. She is allegedly threatening officials with dismissal, while several senior officials have resigned, citing an absence of a conducive working environment.

IDRA Member (Law) Tanzina Ismail submitted her resignation to the Financial Institutions Division on Tuesday. A former senior district and sessions judge, she was appointed to the post for three years on December 2, 2024, with her tenure scheduled to continue until December 1, 2027. Three other members—Apel Mahmud, Mohammad Abu Bakar Siddique and Md Fazlul Haque—were also appointed for three years at the time. Fazlul Haque has recently resigned as well.

On September 6, the authority also cancelled the contractual appointment of its media and communications adviser without citing any reason, according to the report. At the same time, allegations have been made that IDRA Executive Director (Non-Life) Eidtajul Islam is involved in harassing officials and threatening them with dismissal.

Eidtajul was a former first secretary of the National Board of Revenue during the previous Hasina government. Allegations of major irregularities and corruption have been raised against him and former NBR chairman Abu Hena Md Rahmatul Muneem.

Meanwhile, a court on Tuesday ordered the freezing of 25 bank accounts belonging to the two men following an application by the Anti-Corruption Commission (ACC). The order was issued by Acting Judge Md Alamgir of the Dhaka Metropolitan Senior Special Judge’s Court. ACC counsel Tarikul Islam confirmed the matter.

The ACC said it was investigating allegations that Abu Hena Md Rahmatul Muneem, Eidtajul Islam and others acquired illegal assets through various irregularities and corruption. It said “suspicious and unusual transactions” had been detected in the accounts and that attempts could be made to transfer or dispose of the assets, potentially hampering the investigation.

According to Sakif Shamim, chairman of CSER and managing director of Labaid Hospital Group, the insurance sector also suffers from a lack of market depth. The large number of companies in a small market, excessive commissions, operating costs and a sales-driven business model are weakening the sector.

He said the market cannot be expanded simply by selling new policies. Insurance for health, agriculture, property and climate risks must be expanded according to people’s actual needs.

Health insurance, in particular, has significant potential. High out-of-pocket medical expenses can quickly exhaust a family’s savings in the event of serious illness. Sakif Shamim suggested introducing common billing systems, electronic claim settlement and cashless healthcare services to reduce disputes between hospitals and insurers.

He also stressed the use of technology, including online policies, digital premium payments, electronic claim submissions, automated verification and artificial intelligence to detect fraudulent claims. Banks, mobile financial services and digital platforms could also help extend insurance coverage to rural communities, farmers, small entrepreneurs and workers in the informal sector.

Sakif Shamim said the main challenge facing Bangladesh’s insurance sector is not merely expanding the market but restoring trust first.