1 week Ago
The widespread financial irregularities and mismanagement plaguing our life insurance firms , which have put the entire industry at risk, are alarming. According to data from the Insurance Development and Regulatory Authority (IDRA), 31 out of 36 life insurers are yet to settle about 11 lakh policyholders' claims worth Tk 3,643 crore—with clients remaining uncertain as to when they will get their money back. Officials and experts say that poor investment decisions, high agent commissions, excessive management costs, and unhealthy competition are to blame for this.
The situation has particularly worsened in recent years, with IDRA data showing that the claim settlement rate among life insurers dropped from 85 percent in 2020 to 72 percent in 2023. Moreover, of the 31 insurance companies with unsettled claims, nine have the worst settlement rates. For example, Fareast Islami Life recorded Tk 2,577 crore in claims but paid just Tk 32 crore.
Similarly, Padma Islami Life paid only Tk 4 crore against Tk 226 crore in claims, Progressive Life Insurance settled Tk 6 crore of Tk 174 crore in claims, Sunflower Life Insurance settled Tk 2 crore of Tk 141 crore, and BAIRA Life Insurance paid Tk 2 crore of Tk 67 crore in claims. According to the Insurance Act of 2010, claims must be settled within 90 days of submitting all required documentation after a policy matures. However, the fact that policyholders are struggling to get their money back for much longer is entirely unacceptable.
Additionally, the amount and types of irregularities that are to blame for this are staggering. Yet, regulators reportedly never took any major steps against these companies due to political reasons and legal limitations. That political constraints limited regulators' ability to do their jobs seems to have become a common excuse now across industries.
As a result, however, it is the ordinary people that are now struggling. But should the concerned authorities be let off the hook for their failure to perform their duties and protect citizens? And what about those who were directly responsible for the corruption in this sector? It is incumbent upon the government to identify those who are directly responsible for such irregularities and mismanagement and hold them accountable. Moreover, the government needs to develop a comprehensive strategy to ensure that clients recover their money from these companies.
This should include taking legal action against directors involved in financial irregularities and confiscating their assets. The government should also consider monetising the fixed assets of corrupt companies to settle claims. Clearly, mismanagement in the sector has led to a significant loss of credibility.
Therefore, the government should involve experts and other stakeholders to fully reform the sector and ensure that regulators are empowered to effectively oversee it in the future..
