Unpaid Claims Raise Questions over IDRA’s Insurance Oversight
A K M Ehsanul Haque, FCII: Nearly 15 years after the establishment of the Insurance Development and Regulatory Authority (IDRA), Bangladesh’s insurance sector is facing renewed scrutiny over the effectiveness of regulatory oversight, particularly in protecting policyholders and ensuring market discipline.
The scale of the challenge is reflected in the volume of unpaid insurance claims. According to IDRA data, insurers had claims worth about Tk 10,611 crore outstanding or submitted across the life and non-life sectors by the end of March 2026. Of this amount, around Tk 7,779 crore, or 73.31 percent, remained unsettled.
The non-life sector recorded the sharper deterioration, with only 11.3 percent of claims settled by value, leaving approximately Tk 3,369 crore unpaid. In the life insurance sector, claims worth about Tk 4,410 crore, or 64.73 percent, remained unsettled.
These figures do not by themselves establish regulatory failure or wrongdoing. However, they raise questions about the effectiveness of supervision, enforcement and early intervention in a sector where the regulator’s primary responsibility is to protect policyholders.
IDRA’s Mandate and the Regulatory Gap
IDRA was established on 26 January 2011 under the Insurance Development and Regulatory Authority Act 2010 with responsibilities including supervising insurers, conducting inspections, monitoring compliance, protecting policyholders and taking enforcement actions.
The Insurance Act 2010 also provides protection against delayed claim payments by requiring insurers to pay interest in certain cases when claims are not settled within the prescribed period after completion of necessary formalities.
Despite this regulatory framework, delayed claim settlement has remained a persistent concern. In 2024, life insurers settled around 66 percent of claims by value, compared with about 72 percent in 2023, leaving approximately Tk 4,374 crore unsettled. In the non-life sector, claim settlement declined to around 32 percent, compared with 41 percent in 2023.
The problem is particularly concentrated among several financially distressed insurers. IDRA data showed that a number of companies reported unsettled claim ratios above 98 percent by March 2026. These figures raise questions about whether financial weaknesses, liquidity pressures and governance risks were identified and addressed early enough.
The Accountability Question
The key regulatory question is not only whether IDRA can recover unpaid claims after problems emerge, but whether it can identify risks early enough to prevent insurers from reaching a position where policyholders face significant losses.
Effective insurance supervision requires continuous monitoring of solvency, investment risks, governance practices and claims management. A regulator’s performance therefore depends not only on the rules it introduces but also on how effectively those rules are enforced.
Recent developments indicate a more interventionist approach from IDRA. The regulator has taken measures such as restricting new premium collection, appointing administrators and facilitating claim payments from available assets of distressed insurers.
In September, two phases of claim settlement resulted in Tk 37.54 crore being paid to 8,417 policyholders of troubled life insurers. While the payments provided relief to affected customers, the amount remains limited compared with the overall claims backlog.
Capacity and Transparency Challenges
Questions have also emerged about IDRA’s institutional capacity. Effective insurance regulation requires expertise in actuarial science, solvency assessment, investment risk, corporate governance and enforcement.
The debate over regulatory leadership should focus less on professional background alone and more on whether the authority has sufficient expertise, independence and resources to supervise complex insurance institutions effectively.
A World Bank-supported insurance sector reform project helped Bangladesh introduce risk-based supervision, solvency rules, corporate-governance requirements, consumer-protection measures and digital regulatory tools. However, the World Bank’s assessment highlighted a gap between regulatory reforms and their implementation across the insurance industry.
The challenge now is ensuring that regulatory frameworks produce measurable outcomes. Greater transparency, including regular publication of company-wise information on claims, solvency position, complaints and enforcement actions, would help policyholders and investors better evaluate insurers.
From Rules to Results
After 15 years, the key test for IDRA is no longer whether it has the authority to regulate. The question is whether that authority can be effectively used to identify risks early, hold insurers accountable and ensure legitimate claims are settled on time.
The credibility of Bangladesh’s insurance industry will ultimately depend on whether regulatory reforms transform into faster claim settlement, stronger insurer discipline and greater confidence among policyholders.
