Bangladesh’s insurance regulator has ordered all insurance companies to shut down any undisclosed or additional servers within six weeks and consolidate their business and financial records into a unified system.

The move is intended to improve transparency across the insurance industry and strengthen the regulator’s ability to monitor companies’ actual financial and operational positions.

Mir Nadia Ninvin, chairman of the Insurance Development and Regulatory Authority, said a number of insurance companies were not providing regulators with complete information about their businesses and financial conditions. There have also been allegations that some firms were using multiple or hidden servers to keep separate records of business activities, premium income and other financial transactions.

She made the remarks while inaugurating a workshop organised by the Insurance Reporters Forum at the Bangladesh Academy for Rural Development in Cumilla.

Ninvin said discrepancies between information submitted to the regulator and a company’s actual financial position make it difficult to assess its risks accurately. When important records are distributed across several servers, regulators may not receive a complete picture of an insurer’s operations.

Under the directive, companies must close all hidden and additional servers within six weeks and bring their records into a consolidated system. Firms that fail to comply will face legal action, she warned.

The chairman also said technological audits would be used to detect concealed servers. Even if a company attempts to hide a server in a garage, under a bed or in another concealed location, she said, such equipment could be identified through technical inspections.

Risk-based supervision planned by December

The regulator is also planning to introduce a risk-based supervision system by December this year as part of a wider reform of insurance-sector oversight.

Ninvin said audited financial statements alone were not always sufficient to establish the current condition of an insurance company. An audit report may cover a particular financial year and become available at a later stage. If the information does not accurately reflect the company’s actual position, regulators may find it difficult to identify its current financial risks and weaknesses.

The proposed risk-based approach will place greater emphasis on the financial condition of insurers, their business activities, the consistency of information submitted to the regulator and potential areas of risk.

The aim is to make supervision more responsive to the actual condition of individual companies rather than relying solely on periodic financial statements.

Unique identification numbers planned for every policy

The authority also plans to introduce a unique identification number for every insurance policy within the next three to four months.

The system would allow each policy to be identified centrally, making it easier to track policy-related information and verify the records maintained by insurers. The regulator expects the arrangement to reduce opportunities for companies to show fictitious premium income, report only part of their business or withhold relevant information.

A separate verification mechanism is also planned for general insurance.

Under the proposed system, before banks open letters of credit for imported goods, information contained in the relevant insurance cover note would be checked through the regulator’s system. The authority also intends to restrict the acceptance of cover notes that do not carry the proposed unique identification number.

The measures are designed to create a clearer connection between insurance policies and related commercial transactions, while giving regulators an additional means of checking the accuracy of information submitted by insurers.

Claims payments planned for customers of distressed insurers

The regulator is also preparing to begin settling outstanding claims owed by several financially distressed insurance companies.

Ninvin said the process would begin next week for customers of seven to eight financially troubled insurers. Money raised by selling or liquidating the companies’ assets will be used to meet outstanding claims.

The assets include land, government securities and fixed deposits. Proceeds from these assets are being kept in separate bank accounts under the regulator’s supervision and will be used to pay customers who are owed money.

Giving the example of one financially troubled insurer, Ninvin said the company owed around Tk3,000 crore to its customers. The authority is seeking to raise several hundred crore taka initially by selling land in Feni and liquidating some government securities, with the proceeds to be used for claim settlements.

The initiative comes amid concerns over delayed claim payments and the financial weakness of some insurers. For policyholders, the ability of an insurance company to honour legitimate claims is central to confidence in the sector. Delays can leave customers facing prolonged uncertainty, particularly when claims involve substantial amounts.

Government agencies to work together on verification

The regulator also plans to coordinate with Bangladesh Bank, the National Board of Revenue and the Bangladesh Securities and Exchange Commission to strengthen the verification of information supplied by insurance companies.

Information held by different government agencies could be compared with records submitted by insurers, creating a broader mechanism for identifying inconsistencies. Such coordination would also help regulators examine whether companies’ reported business activities and financial information are consistent with records held elsewhere in the public system.

Ninvin said the regulator currently oversees 82 insurance companies but has a workforce of around 150 people. Given the size of the sector, she said stronger technological capabilities and a more effective legal framework were necessary to carry out regulatory responsibilities with limited manpower.

The server directive is therefore part of a broader attempt to strengthen oversight of Bangladesh’s insurance industry. Consolidating company data, introducing unique policy identification numbers, moving towards risk-based supervision and improving information-sharing among government agencies are all intended to give regulators a clearer picture of insurers’ financial health.

At the same time, the planned use of distressed companies’ assets to settle outstanding claims places greater emphasis on the interests of policyholders. The regulator’s immediate challenge will be to ensure that the new measures are implemented consistently across the sector and that the information provided by insurers accurately reflects their actual business and financial positions.