Bangladesh: Insurance sector may see liquidations and mergers
Source: Asia Insurance Review | Mar 2024
The insurance regulator, the Insurance Development and Regulatory Authority (IDRA), has suggested mergers of life insurance companies instead of liquidating them due to their weak financial health.
Some of the insurance companies did not even make an effort to improve their financial position, reported The Financial Express quoting the IDRA.
Sources at the IDRA say that in a recent report sent to the Financial Institutions Division of the Finance Ministry, the regulator pointed out that the failure to pay insurance claims by some companies has caused “a lack of confidence among people in the insurance sector”.
Six life insurance companies alone are reported to have unpaid claims totalling BDT26.81bn ($244.3m).
“These companies lost the capability of paying insurance claims due to mismanagement, bad investment, financial irregularities and fund misappropriation,” the report, signed by IDRA director SM Masudul Haque, reads.
Sheikh Kabir Hossain, president of the Bangladesh Insurance Association, told The Financial Express that measures could be taken to help weak insurers by injecting funds into them or appointing administrators.
Regarding the liquidation of insolvent insurance companies, he asked which stakeholder would bear the responsibility of paying claims to the insured.
74 insurance companies are operating in Bangladesh including 41 life and 33 non-life insurers. A