Insurance Companies Will Be Forced To Sell Assets To Settle Claims: Finance Minister
Finance Minister Mr. Amir Khasru Mahmud Chowdhury has warned that insurance companies will be compelled to sell their assets, if necessary, to settle customers’ claims, denouncing the prolonged non-payment of policyholder dues as completely unacceptable. Following a visit to the Insurance Development and Regulatory Authority (IDRA) and a meeting with its officials, the minister revealed that assuming office exposed severe mismanagement, corruption, and irregularities within the insurance industry, mirroring the exploitation previously witnessed in the banking sector. To tackle this crisis, the government is poised to enact crucial legal and regulatory amendments in Parliament to prevent the sector from turning into an unregulated domain and to restore much-needed market discipline.
Highlighting the scale of the financial distress, the Finance Minister pointed out that currently 57 percent of insurance claims remain unpaid, meaning 57 out of every 100 taka of claims are unsettled. While insurers are legally obligated to maintain adequate liquidity to clear these dues, some companies have instead diverted funds into land, alternative assets, and government securities while neglecting policyholders. Underlining that prioritizing valid claim settlements supersedes hoarding assets, he reaffirmed that defaulting companies will face strict punitive measures and a specific timeframe to clear dues, while compliant firms will be viewed positively.
According to IDRA Chairman Ms. Mir Nadia Nivin, outstanding insurance claims across the country total approximately BKD 7,000 crore, leaving a massive backlog that the regulatory body aims to reduce by elevating the settlement rate from 57 percent to at least 75 percent. Elaborating on regulatory oversight, the Chairman noted that out of 82 insurance companies, excluding about 8 life insurers, the operations of the remaining 72 are under regular review, with moderately distressed firms being actively engaged to evaluate financial capacities and expedite payouts. It was further announced that five companies will disburse funds against policyholder claims nationwide within the next week.
The IDRA has outlined a dual-pronged strategy to address pending claims, which involves engaging in regular dialogues with insurance companies to identify barriers and compliance issues, alongside exercising targeted supervision over distressed firms. These efforts are already yielding results, as some companies have begun paying out claims through targeted asset liquidations, highlighted by a recent event organized to disburse customer claims for a second batch through the sale of insurance company assets. The regulatory body has reiterated that stringent measures against chronically defaulting companies will persist unabated to ensure the safety of ordinary citizens’ hard-earned savings.
Restoring public confidence in the insurance sector remains a top priority, requiring strict safeguarding of customer funds to rebuild the trust necessary for long-term industry stability. The Finance Minister concluded that a disciplined and reliable insurance sector can significantly contribute to the national economy through robust employment generation and increased tax revenue. By holding non-compliant institutions accountable and forcing asset liquidation where liquidity is lacking, the government aims to rescue the vulnerable industry and protect the future security of citizens relying on insurance during hardships.
