The interim government of Bangladesh has embarked on an ambitious programme of reforms aimed at revitalising the country’s ailing insurance sector. Years of administrative weaknesses, regulatory gaps, and declining public confidence have driven insurance penetration to historic lows, prompting urgent corrective measures. The reform initiative seeks to restore financial stability, strengthen governance, and rebuild trust among policyholders.
Dr M. Aslam Alam, Chairman of the Insurance Development and Regulatory Authority (IDRA), told The Financial Express, “Our reform agenda focuses on ensuring the solvency of financially vulnerable insurance companies, safeguarding policyholders’ interests, and restoring public confidence in the sector.” He added that over the past year, IDRA has undertaken legal, institutional, and technological measures to address longstanding sectoral challenges.
Key elements of the reform include amendments to three existing laws—the Insurance Act 2010, the IDRA Act, and the Insurance Corporation Act 2019—as well as proposals for three new laws: the Insurance Resolution Act, the Actuarial Act, and the Chartered Insurance Institute Act. Consultations with relevant stakeholders have been completed, and the bills are currently under ministerial review.
Currently, five to six insurance companies are financially incapable of meeting claims, affecting approximately 1.5–1.6 million policyholders. Insurance penetration has declined to 0.30%, down from 0.90% in 2010. To stabilise weak companies, IDRA has proposed a resolution framework modelled on banking-sector practices, allowing for mergers, restructuring, or managed resolution.
In the non-life insurance segment, unresolved disputes with the state-run General Insurance Corporation (GIC) have created significant challenges. IDRA has suggested making the 50% GIC reinsurance requirement optional, enabling capable firms to secure international reinsurance and settle claims promptly.
Digital transformation is another pillar of reform. Insurance companies’ databases will be integrated with IDRA systems, alongside the launch of a ‘National Core Insurance Solution.’ Additionally, increased regulatory fees are expected to raise IDRA’s annual revenue from BDT 12 million to approximately BDT 25 million.
Dr Alam summarised, “Our ultimate goal is to protect policyholders, restore confidence, and increase insurance acceptance through structural, governance-driven reforms.”
Proposed Insurance Sector Reforms in Bangladesh
| Reform Area | Proposed Measures | Expected Outcomes |
|---|---|---|
| Legal | Amend Insurance Act & IDRA Act; introduce Insurance Resolution Act | Resolution of weak companies; stronger regulatory framework |
| Administration | Executive appointments/removals; subsidiary oversight; audits | Improved corporate governance; reduced corruption |
| Reinsurance | Make 50% GIC requirement optional | Faster claim settlements; dispute resolution |
| Commission | Eliminate irregular commissions | Reduced corruption; enhanced financial stability |
| Institutional | Establish Actuarial Institute & Chartered Insurance Institute | Skilled workforce; enhanced technical capacity |
| Digital | Database integration; National Core Solution | Increased operational efficiency and transparency |
| Regulatory Fees | Increase registration and inspection fees | Strengthened IDRA capacity |
If successfully implemented, these reforms are expected to significantly enhance long-term sector stability, economic resilience, and public trust in Bangladesh’s insurance industry.
