Similar to rest of the world, life insurance represents a shield against life's uncertainties in Bangladesh too - a promise of protection when illness, accidents, or tragedy strike. In Bangladesh, however, that shield is cracking fast.
According to the Insurance Development and Regulatory Authority (IDRA), as of March 31 of this year, as many as 36 life insurance companies owe their customers a staggering Tk 4,694 crore in unpaid claims.
Out of total claims worth Tk 6,375 crore, only Tk 2,368 crore have been settled - leaving 1.3 million policyholders still waiting. In addition, IDRA's report also exposeshow decades old practices of mismanagement, corruption and weak law enforcement have pushed the industry into a crisis.
As a dire repercussion, the entire insurance industry is sinking into distrust while Irregularities and delays have become norm of the day.
For a deeper understanding of the crisis, it is important to look into some of the miserably performing insurance companies.
At the heart of the crisis lies Fareast Islami Life Insurance Company Limited, understandably the worst performer. Out of Tk 2,976 crore in total claims, the company paid only Tk 58 crore to its policy holders-a mere 1.96 percent.Other troubled firms include Sunflower Life, Baira Life, Padma Islami Life, Golden Life, Homeland and Progressive Life, together owing about 12 lakh customers.Sunflower Life Paid only 0.72 per cent of Tk 176 crore in claims.Baira Life Paid 0.73 percent of Tk 77 crore.Padma Islami Life (S Alam Group) Paid 1.68 percent out of Tk 240 crore. The other 3 - Golden Life, Homeland, Progressive Life payment rates below 2 percent.
This horrific reality also echoes of growing mistrust and little confidence of our people on the insurance sector.
However, the crisis is not confined to life insuranceonly, Non-Life Insurance Firms are also failing customers.The country's 46 non-life (general) insurance companies are also struggling in meeting client claims.According to IDRA's unaudited report, as of December last year, non-life insurers owed Tk 2,635 crore in unpaid claims, out of Tk 3,872 crore in total claims, meaning only 32 percent claims have been settled.
We can see clear writings on the wall, unless urgent reforms are implemented, Bangladesh's insurance sector could soon face a total credibility collapse. While sector is going through a transitional phase, rebuilding trust is the biggest challenge. Even though IDRA is working on a 'comprehensive solution' to the growing backlog, but it is not enough.
We urge the Finance Ministry and regulators to jointly act. Legal steps must be taken to ensure timely payment of claims. Otherwise, confidence will never return.
As for suffering policy holders we advise to accurately submit all documents with due diligence. File a complaint with IDRA,if unpaid after 90 days.Appeal to IDRA's Dispute Resolution Committee,if unresolved.Finally, file a court case without delay.
IDRA's latest report is an alarming eye-opener, taking into serious consideration and as a top priority the government must act fast.
