FID Upholds Higher Insurance Licence Renewal Fees

Bangladesh’s Ministry of Finance has directed all life and non-life insurance companies to pay their 2026 licence renewal fees at the rate of Tk 2.50 per thousand taka of gross premium, maintaining the increased fee structure despite objections from insurance company owners and industry representatives.

The directive was issued on 23 June through an official notice from the Insurance-2 Branch of the Financial Institutions Division (FID). The decision effectively settles a debate that has been ongoing within the insurance sector since the publication of a revised government gazette earlier this year.

In a letter sent to the Chairman of the Insurance Development and Regulatory Authority (IDRA), the Financial Institutions Division instructed the regulator to take the necessary steps to collect renewal fees in accordance with Rule 3(2) of the Insurance Business Registration Fee Rules, 2012. The letter specifically refers to the rates and timelines outlined in the latest amended government gazette.

The latest instruction follows a request made by IDRA on 26 April, when the regulator sought clarification and legal guidance from the Financial Institutions Division regarding the applicable renewal fee rate for private insurance companies in 2026. The ministry’s response has now confirmed that the revised fee structure will remain in force.

The issue has generated considerable discussion within the insurance industry. On 4 February, the Financial Institutions Division published a gazette increasing the registration renewal fee from Tk 1.00 to Tk 2.50 per thousand taka of gross premium. The adjustment represented a 150 per cent increase over the previous rate and immediately drew criticism from insurance companies, which argued that the rise was excessive.

Industry representatives contend that the higher fee will significantly increase operational costs. According to their calculations, an insurance company generating Tk 100 crore in gross premium would see its annual renewal fee rise from Tk 10 lakh to Tk 25 lakh under the new structure. Company owners argue that such a sharp increase comes at a time when the sector is already facing challenges related to business expansion, profitability and customer confidence.

The Bangladesh Insurance Association (BIA) has repeatedly called for the increased fee to be withdrawn or reconsidered. The organisation has described the measure as an additional financial burden on insurers and warned that it could place pressure on smaller and medium-sized companies operating in the market.

A comparison of the previous and revised fee structure is shown below:

IDRA, however, has defended the rationale behind the increase. In correspondence with the Financial Institutions Division, the regulator noted that it finances its activities largely through its own revenue sources. The authority stated that its expenditure has risen substantially in recent years due to ongoing digital transformation initiatives, the development of the National Core Insurance Solution, and efforts to establish new institutional frameworks aimed at modernising the sector.

Regulatory officials believe these projects are necessary to strengthen oversight, improve service delivery and enhance transparency within the insurance industry. As a result, they argue that higher renewal fees are required to support these expanding responsibilities.

With the ministry’s latest directive now in effect, insurance companies will be required to pay renewal fees at the revised rate from 2026. The decision marks a significant development for the sector and is expected to influence insurers’ financial planning and operating costs in the coming years.