Unpaid insurance claims rise in Bangladesh: What policyholders should know

Raj Kiron Das: Bangladesh’s insurance sector has expanded significantly over the past decade, yet public trust remains fragile as claim settlement delays continue to rise. Policyholders frequently face prolonged processing times, complex procedures and in some cases, harassment when seeking compensation after policy maturity or insured events.

Recent industry data suggest that a growing number of customers are still waiting for their rightful payments, highlighting deep-rooted structural weaknesses within the sector.

The 90-day rule vs reality

Under the Insurance Act 2010, insurers are legally required to settle claims within 90 days after receiving all necessary documents. In practice, however, this deadline is often not met.

Industry estimates indicate that in 2023, around 10 lakh policyholders had outstanding claims totaling Tk 3,050 crore across 29 insurance companies. The situation has since deteriorated. Currently, approximately 12 lakh customers remain unpaid, while 32 companies are under pressure due to delayed settlements. By 2025, unpaid claims are projected to rise to Tk 4,403 crore.

Key reasons behind the crisis

Experts attribute the crisis to a combination of factors, including financial irregularities, weak corporate governance, corruption, high-risk investments, excessive operational costs and unhealthy competition within the market.

Several insurers are also facing liquidity constraints. To manage the situation, some companies have resorted to selling assets, taking loans and implementing recovery strategies. However, analysts say that limited regulatory oversight has allowed these issues to persist and in some cases, worsen.

Declining claim settlement rates

The overall claim settlement performance of life insurance companies has declined significantly in recent years.

Over the past year, insurers settled claims worth Tk 8,754 crore, representing only 66.06% of total claims- a sharp drop from around 85% in 2020.

By comparison, the global average claim settlement rate stands at approximately 97–98%, with neighboring India achieving similar levels. Bangladesh’s lower rate points to systemic inefficiencies and operational weaknesses within the industry.

‘Fine print’ and documentation gaps

Complex policy terms, often referred to as the ‘fine print’, remain a major challenge for policyholders. Many customers struggle to fully understand these conditions, increasing the risk of errors or incomplete submissions.

Industry experts note that missing or incorrect documents, such as medical reports, death certificates, or police reports (FIRs), often give insurers grounds to reject claims. As a result, proper documentation and awareness are critical to ensuring successful claim processing.

Legal support and alternative solutions

As claim disputes become more complex, legal assistance is playing an increasingly important role. Lawyers can help policyholders interpret policy conditions, verify documentation and submit claims correctly.

To avoid lengthy court proceedings, alternative dispute resolution (ADR), particularly mediation, is gaining traction. Policyholders can also file complaints with the Insurance Development and Regulatory Authority (IDRA) to seek resolution.

Performance gaps in the industry

Despite overall challenges, some insurers continue to perform strongly. In 2024, MetLife Bangladesh led the sector by settling Tk 2,895 crore in claims, achieving a high settlement rate of 97.79%.

However, many local insurers still face allegations of delayed or partial payments, underscoring significant disparities within the industry.

Emerging challenges

Recent administrative instability and mass protests have introduced new complexities in insurance claims. In some cases, insurers have reportedly cited such events as grounds for delaying or denying payments.

Without clear legal interpretation, policyholders often find it difficult to secure compensation in these situations, further complicating an already challenging claims process.

A matter of rights

Insurance claims are not merely financial transactions; they represent a fundamental right of policyholders. Yet, for many customers in Bangladesh, accessing that right remains a significant challenge.

Experts emphasise that improving awareness, ensuring accurate documentation and seeking legal support when necessary can help reduce delays and disputes. At the same time, stronger regulatory enforcement and greater transparency will be essential to restoring confidence in the country’s insurance sector.