The Insurance Development and Regulatory Authority of Bangladesh (IDRA) has issued a comprehensive directive establishing standardised guidelines for determining the Full Insured Value (FIV) of motor vehicles. The move is intended to enhance transparency, reliability, and efficiency in insurance premium calculations and claim settlements for both insurers and policyholders.
Under the new directive, the FIV of new and refurbished vehicles will now be directly based on the showroom invoice price. This marks a departure from previous practices, where depreciation rates were traditionally applied to calculate the insured value. IDRA officials emphasised that this adjustment is designed to provide clarity and reduce disputes between insurers and customers.
According to IDRA sources, the decision followed recommendations from the 187th Central Rating Committee meeting held on 9 December 2025, and was formally approved during the 193rd Governing Meeting of IDRA on 6 January 2026. Following approval, Circular No. Non-Life 110/2026 was issued to inform stakeholders of the updated guidelines.
Key provisions of the directive include:
New and refurbished vehicles: FIV equals the showroom invoice price.
Used vehicles: FIV is determined through mutual agreement between the insurer and the policyholder, based on the prevailing market value.
Depreciation: Traditional age-based depreciation is no longer applied when calculating FIV for new or refurbished vehicles.
For reference, IDRA’s previously established age-based depreciation rates for vehicles are as follows:
| Vehicle Age | Depreciation Rate |
|---|---|
| Up to 1 year | 0% |
| 1–2 years | 10% |
| 2–3 years | 15% |
| 3–4 years | 20% |
| 4–5 years | 25% |
| 5–6 years | 30% |
| 6–7 years | 40% |
| Over 7 years | 50% |
Insurance analysts have welcomed the reform, noting that long-standing ambiguities in FIV calculations, which previously complicated claim processes, will be eliminated. They anticipate that claim settlements will become faster and more transparent, disputes between insurers and policyholders will decline, and confidence in the motor insurance sector will strengthen.
Moreover, linking the FIV of new and refurbished vehicles directly to showroom prices is expected to streamline policy underwriting, improve risk assessment accuracy, and ensure premiums and claims are calculated more reliably. Industry experts observe that this step represents a significant modernisation of Bangladesh’s motor insurance sector, aligning local practices with international standards while safeguarding consumer interests.