Insurance regulator considers bailout plan

Bangladesh’s insurance regulator is considering a one-time bailout package to help insurance companies clear around Tk 7,000 crore in outstanding claims, a move aimed at restoring public confidence in the sector.

Mir Nadia Nivin, chairman of the Insurance Development and Regulatory Authority (Idra), made the remarks yesterday at a seminar held at Hotel 71 in the capital. The event was organised by the Insurance Reporters’ Forum (IRF).

“Some companies are now selling their assets. Once these sales are completed, they will be able to settle their outstanding claims. We will sit with each company to find practical ways to solve these problems,” she said.

Nadia added that some insurers have funds tied up in banks, and Idra will work with the Bangladesh Bank to explore ways to release those resources. Companies may also sell investments in treasury bonds to raise liquidity for claim payments.

“If a funding gap still remains after using these options, we may consider seeking a one-time bailout package,” she said.

NO BAILOUT UNLESS ALL OTHER OPTIONS ARE EXHAUSTED

Nadia said outstanding claims are not limited to weak companies alone. Some financially strong insurers are expected to settle dues independently, while others have moderate capacity, and some are severely distressed.

However, she stressed that the sector must first demonstrate that it has fully explored all possible solutions before seeking government support.

“As a sector, we need to do our homework and prove that we have explored every possible way to settle these claims. Only then can we justify a one-time bailout package to clean up the sector and give it a fresh start,” she said.

She also warned that the industry must prevent a repeat of the current crisis through stronger internal reforms.

“At the regulatory level, we must strengthen our rules so that companies do not end up in this situation again. Unless we can give credible assurances on both fronts, it will be very difficult to seek a bailout package from the government,” she added.

The insurance sector is currently facing a deep trust deficit, as claim settlements are being delayed by several companies. In some cases, funds were allegedly embezzled, worsening the crisis.

According to an audit report, Fareast Islami Life Insurance allowed its former chairman and directors to commit repeated financial crimes and siphon off more than Tk 2,100 crore of policyholders’ money between 2010 and 2020.

Similar incidents have been reported in other insurers, leaving the sector broadly affected by financial mismanagement and embezzlement.

Bangladesh’s insurance penetration remains below 0.5 percent, reflecting the sector’s limited reach and weak public trust.

Nadia also identified three key priorities for sustainable reform -- restoring public confidence, strengthening the regulatory framework and long-term investment, and improving human resource capacity.

Speaking as the chief guest, Rashed Al Mahmud Titumir, adviser to the Ministry of Finance and Planning, said there is no alternative to rapid digital transformation, good governance, and a strong regulatory framework if the insurance sector is to become efficient, sustainable, and trusted.

He said the industry must become modern, transparent, accountable, and technology-driven to overcome its current challenges.

He added that the sector has yet to achieve meaningful digitalisation, creating gaps in customer service, claims settlement, information management, and governance.

“Effective use of technology will not only improve customer satisfaction but also significantly enhance transparency, accountability, and operational efficiency,” he said.

Titumir also said Bangladesh is highly vulnerable to climate change, making a strong insurance sector essential for managing disaster-related losses and ensuring economic security.

He said traditional supervision alone is not enough. Sector-specific audit systems should be introduced, along with stronger capacity and independence for regulators.

“Public confidence in the insurance sector can only be restored through long-term reforms, good governance, transparency, and accountability,” he added.

The seminar was chaired by IRF President Golam Mowla. Speakers included Sayeed Ahmed, president of the Bangladesh Insurance Association, BM Yusuf Ali, president of the Bangladesh Insurance Forum, and Prof Md Shahidul Islam Zahid of the Department of Banking and Insurance at the University of Dhaka.