IDRA Proposes Mandatory Audit Reports for Fire Insurance Claims; BIA Objects

Staff Reporter: Bangladesh's insurance regulator has proposed making audit reports a mandatory requirement for settling fire insurance claims with Sadharan Bima Corporation (SBC), a move that has drawn strong objections from the Bangladesh Insurance Association (BIA).

The Insurance Development and Regulatory Authority (IDRA) has prepared a draft checklist for insurance claim settlements and asked stakeholders to submit their final opinions by 10 August. The proposal follows a meeting held on 16 July between representatives of IDRA's Non-Life Division, SBC and BIA.

Under the draft, policyholders filing fire insurance claims would be required to submit 26 documents, including an audit report. However, BIA has proposed reducing the requirement to 12 documents, arguing that audit reports should not be mandatory for fire insurance claims because they often delay claim settlements, causing unnecessary hardship for policyholders.

The regulator's initiative aims to simplify the claims process by introducing separate and clearly defined checklists for different types of insurance policies. According to BIA, insurers often request additional documents beyond the existing requirements, making claim settlements more complex and time-consuming. The proposed framework would prevent insurers from requesting documents outside the approved checklist.

The meeting also reviewed existing and proposed claim settlement checklists for nearly 20 non-life insurance products, including fire, marine, motor, burglary, workmen's compensation, personal accident, public liability, machinery breakdown and contractors' all risks insurance.

BIA further proposed that a Fire Service report should not be mandatory for fire losses below Tk 25 lakh if the policyholder successfully extinguished the fire independently. It also recommended requiring nominees' National Identity Cards and succession certificates for death claims under motor and accident insurance policies, as well as departmental investigation reports for burglary claims involving large factories.

According to the meeting's decision, BIA and SBC will submit their final recommendations to IDRA by 10 August. The regulator will then review the feedback before finalising the checklist for non-life insurance claim settlements.