Bangladesh insurers slam SBC’s new reinsurance rules as one-sided

Staff Correspondent: The state-owned Sadharan Bima Corporation (SBC) has introduced two new conditions for renewing reinsurance treaties for the 2026-2027 underwriting year, aiming to improve discipline and transparency in Bangladesh’s non-life insurance sector. However, private insurers have described the measures as one-sided and impractical.

Under the revised framework, SBC has made it mandatory for insurers with outstanding reinsurance premiums to pay at least 30 percent of their dues before renewing their treaties. In addition, companies will be required to submit monthly bordereaux (detailed policy data) for marine cargo insurance, replacing the current quarterly reporting system.

Reinsurance treaties are typically renewed by April each year, and SBC has already begun the renewal process for the upcoming cycle.

According to SBC officials, the move is intended to address the longstanding practice of carrying unpaid premiums while continuing reinsurance operations, often justified through adjustments with claims.

Although a 50 percent minimum payment requirement was introduced for the 2025-2026 cycle, most insurers failed to comply. As a result, SBC’s board has set a revised threshold of 30 percent for the upcoming year to ensure better financial discipline.

SBC expects financially stronger insurers to exceed this minimum payment, which would help streamline premium collection and claims settlement, ultimately enhancing trust and stability in the insurance sector.

SBC argues that the shift to monthly reporting is necessary to improve transparency. Marine cargo policies typically have a duration of around 30 days, making quarterly reporting less effective.

Officials said that under the current system, some policies are excluded from reports, particularly if no claims arise, leading to under-reporting and non-payment of due premiums. Monthly reporting, SBC believes, will reduce such irregularities and ensure accurate data flow.

The corporation also maintains that monthly submissions will not affect reinsurance coverage and will instead make the process more efficient and risk-free for all parties.

Private insurers, represented by the Bangladesh Insurance Association (BIA), have raised concerns over both conditions.

Industry leaders argue that monthly bordereaux submission would create operational burdens and could even expose some policies to coverage gaps. They also point out that quarterly reporting is the global standard, particularly in dealings with international reinsurers.

Shafique Shamim, Secretary General of the Bangladesh Insurance Forum and CEO of Sena Insurance, said discussions are ongoing with SBC to resolve the issue. He emphasised that reinsurance agreements must ensure fairness for both parties.

He also said that if insurers are required to settle 30 percent of outstanding premiums, SBC should also expedite the settlement of pending reinsurance claims.

Similarly, Imam Shahin, CEO of Asia Insurance, warned that monthly reporting could create complications, including policy lapses and delays due to incomplete shipping data. He described the 30 percent payment condition as one-sided and lacking balance.

Hasan Tarek, CEO of Eastern Insurance, echoed similar concerns, stating that monthly reporting is not aligned with international practices and may increase risk exposure for insurers.

In a letter sent to SBC on March 31, BIA highlighted that many insurers are facing liquidity challenges due to the ongoing dollar crisis, global conflicts, and economic pressures. As a result, they requested flexibility in settling outstanding premiums and called for a one-month extension of the treaty renewal deadline.

The association also urged SBC to consider completing treaty renewals without enforcing immediate payment requirements, particularly for companies with pending reinsurance claims.