The Bangladesh insurance regulator, Insurance Development and Regulatory Authority (IDRA) has banned life insurance companies from making the purchase of a new policy a requirement for settling existing claims.
Under these new rules, insurers cannot force policyholders or nominees to buy additional coverage to receive the payouts they are already owed. The regulator feels that such practices violate the law and undermine policyholders' interests.
In a circular issued on 15 October 2026, IDRA said it had observed that some life insurers were making the purchase of new policies a condition for settling maturity claims, death claims and survival benefits.
A recent circular revealed that some insurance companies have been taking premiums for new policies out of existing policy payouts, leaving policyholders and nominees with lesser amounts. The regulator clarified that existing laws require insurers to pay out claims in full within 90 days.
The regulator said insurers must transfer the entire amount payable against a claim to the bank account of the policyholder or nominee in a single transaction and no amount can be deducted from the claim proceeds, except applicable government revenue.
The circular also introduced restrictions on issuing new policies to customers whose maturity claims are settled late. If an insurer settles a maturity claim after the stipulated 90-day period but within the following 30 days, it will not be allowed to issue a new policy to the same policyholder for 30 days from the date of the final payment.
If the claim is paid 120 days or more after it becomes due, the insurer will be barred from issuing a new policy to that policyholder for 180 days from the date of the final payment. However, insurers will face no such restriction on issuing a new policy to a customer if the maturity claim is settled in full within the stipulated 90 days, according to the circular.