Bangladesh's insurance industry is grappling with a deepening crisis of public confidence as millions of policyholders continue to wait months and even years for their rightful claims, exposing widespread irregularities, liquidity shortages, and alleged financial misconduct within the sector.
Despite completing all formal procedures, including policy maturity and submission of required documents, a large number of customers are still unable to receive their insurance payouts. What was once seen as a financial safety net has increasingly become a source of uncertainty and frustration for policyholders.
According to official estimates, nearly 1.2 million clients are currently waiting for around Tk 4,400 crore in insurance claims from various companies across the country.
A senior official at the Insurance Development and Regulatory Authority (IDRA), speaking to The Daily Industry, acknowledged the scale of the crisis, saying, "There is a serious mismatch between declared liabilities and actual payments. In many cases, claims remain unresolved far beyond the legally mandated 90-day period."
Claims Delayed for Months and Years: Under the Insurance Act, companies are required to settle claims within 90 days of receiving all necessary documents. However, in practice, many cases remain pending for months or even years, with policyholders alleging repeated delays, excuses, and administrative hurdles.
Industry insiders say the crisis is being driven by a combination of liquidity shortages, weak corporate governance, and alleged corruption within certain insurance companies. A policyholder, Nazrul Islam Khan, who took out a policy in 2008 with Fareast Islami Life Insurance Company, experienced years of delay even after his policy matured in 2020. After his death, his family continued to struggle to recover the claim amount.
"They kept saying 'come tomorrow' or 'the file is under process.' There was always a new excuse," a family member told The Daily Industry, describing their prolonged ordeal. Another customer, Jahidul Islam, said his family had two matured policies but still had not received any payout. "Even after completing all formalities, there is no response," he said.
Tk 4,403 Crore in Outstanding Claims: IDRA data shows that 32 insurance companies currently hold unpaid claims of around Tk 4,403 crore. Of these, at least seven companies are struggling significantly to settle their liabilities.
The situation has worsened over time. In 2023, about 1 million policyholders were awaiting payments totaling Tk 3,050 crore. By 2025, the number of affected customers had increased, highlighting a worsening liquidity and governance crisis.
In the last year alone, life insurance companies reportedly settled Tk 8,754 crore in claims, representing about 66 percent of total dues. However, officials note that settlement rates have sharply declined compared to earlier years.
An IDRA official told The Daily Industry, "The global average claim settlement rate is around 97-98 percent. In Bangladesh, it has fallen significantly, which is alarming for the sector's credibility."
Allegations of Mismanagement and Fund Misuse: Multiple investigations and audit reports have raised concerns over financial mismanagement in several insurance firms. In some cases, company promoters are accused of diverting premium money under the guise of investment.
An industry analyst said, "In several instances, funds collected from policyholders were shown as investments on paper, but no actual investment was made. This has severely weakened liquidity positions.
Fareast Islami Life Insurance, one of the largest players in the sector, reportedly had Tk 3,442 crore in outstanding claims but has managed to pay only Tk 214 crore, leaving over 5.66 lakh policyholders still awaiting payments.
A special audit conducted earlier found evidence of large-scale irregularities, including allegations of Tk 2,367 crore misappropriation and additional accounting discrepancies of Tk 432 crore.
Company CEO Abdur Rahim Bhuiyan told The Daily Industry, "We are trying to recover funds through asset sales and legal action. Some steps have already been taken, including filing cases and pursuing recovery of misappropriated money."
Systemic Weakness and Oversupply of Companies: Economists argue that the sector suffers from structural weaknesses, including political influence in licensing and an oversupply of insurance companies compared to actual market demand.
An economist told The Daily Industry, "Too many companies were licensed without proper market justification. Many were approved based on political considerations rather than professional criteria." This has led to intense competition, weak financial stability, and poor service delivery across the industry. Companies Citing Liquidity Crisis: Several insurance companies blame liquidity constraints for their inability to settle claims on time. Progressive Life Insurance's executive official Saiful Amin said, "We are facing liquidity challenges, but steps are being taken to sell assets and settle outstanding claims. Earlier documentation issues have largely been resolved."
Similarly, Golden Life Insurance CEO Sumal Kanti Das said efforts are underway to improve claim payments, while urging regulators and industry bodies to take coordinated action.
Public Confidence at Historic Low: Experts warn that the prolonged crisis is eroding public trust in the entire insurance sector. Dr. Md. Shahidul Islam Jahid, Chairman of the Department of Banking and Insurance at Dhaka University, told The Daily Industry, "Public trust in the insurance industry is at a very low level. If this continues, people will increasingly move away from insurance products altogether."
He stressed the need for stronger regulatory enforcement, saying that some companies deliberately delay payments, believing they will not face strict legal consequences.
Regulatory Push for Reform: IDRA has acknowledged the severity of the situation and is introducing stricter oversight measures, including company grading systems, special audits for weak firms, and increased accountability for chief executives. A consultant to IDRA, Saifun Nahar Sumi, said, "We are tightening regulatory measures to address liquidity issues and improve discipline in the sector. Weak companies are being closely monitored."
A Sector at a Crossroads: With billions of taka in unpaid claims and millions of distressed policyholders, Bangladesh's insurance industry stands at a critical crossroads. Unless governance reforms, financial discipline, and regulatory enforcement are significantly strengthened, experts warn that the sector risks losing the very foundation it depends on-public tru
