Insurance fraud penalties in Bangladesh: Legal framework and recent developments

Desk report: Insurance fraud in Bangladesh is governed primarily by the Insurance Act 2010 and the Penal Code 1860, with oversight by the Insurance Development and Regulatory Authority (IDRA).

Under Section 130 of the Insurance Act 2010, making false statements or submitting fraudulent documents in insurance matters may result in fines of up to Tk 5 lakh, imprisonment for up to three years, or both. The Act also provides for administrative penalties, typically ranging from Tk 1 lakh to Tk 10 lakh, for regulatory violations such as unauthorised policy issuance, claim delays and non-compliance with approved practices.

Criminal offences related to insurance fraud fall under the Penal Code 1860. Sections 415-420 (cheating) provide for penalties of up to seven years’ imprisonment and fines. Forgery-related offences under Sections 463-465 carry imprisonment of up to two years and/or fines, while falsification of accounts under Section 477A may result in imprisonment of up to seven years and/or fines. In cases involving illicit financial flows, the Money Laundering Prevention Act 2012 may also apply.

Recent allegations of large-scale financial irregularities in the life insurance sector have intensified scrutiny. Several companies have been implicated in the misappropriation of policyholder funds through unauthorised transactions. Regulatory responses have included financial penalties and increased monitoring, though some industry observers have questioned whether existing sanctions are sufficient to deter systemic fraud.

In response, IDRA has proposed amendments aimed at strengthening consumer protection. Proposed measures reportedly include enhanced recovery mechanisms, such as the liquidation of directors’ personal assets in proven fraud cases, expanded regulatory powers and stricter punitive provisions. As of mid-March 2026, these proposals remain under review pending stakeholder consultation.