New Rules Limit Overseas Life Insurance Expenses

The Insurance Development and Regulatory Authority (IDRA) has introduced new rules to cap the operating expenses of life insurance companies’ overseas head offices. Published in the official gazette on 13 January 2026, the updated regulation — Life Insurance Business Management Expenses Ceiling Rules, 2020, Rule 4 — stipulates that expenditure by foreign-based head offices cannot exceed 3% of net premiums.

The directive clarifies that if the primary business operations are conducted in Bangladesh, any expenses incurred by overseas head offices will be counted within the domestic expenditure limits specified under Rule 3 and will never be treated as additional costs. Furthermore, prior approval from IDRA is now mandatory before transferring any funds abroad for operational purposes.

Previously, the 2020 version of the regulation did not provide guidance on overseas head office expenses. While the 2010 Insurance Act mentioned head office expenditure, it did not specify any percentage or monetary limit. To address this gap, a dedicated notification was issued on 19 May 2022, establishing clear ceilings for foreign head office expenses based on net premiums.

The 2022 notification set the maximum allowable expenditure rates for both first-year and renewal premiums, as illustrated below:

Before the 2022 notification, MetLife’s U.S. head office expenses were governed by regulations dating back to 1958. The new rule is widely regarded as a significant step towards modernising and bringing transparency to overseas expenditure practices.

By enforcing these limits, IDRA aims to strengthen cost control and regulatory oversight for life insurers engaged in international operations. Ultimately, the measure is expected to safeguard the interests of policyholders and promote sustainable business practices within the country’s insurance sector.