Enforcement, not amendment, is the key to insurance sector reform: Experts

Staff Correspondent: Strengthening enforcement of the Insurance Act 2010- not amending it- is the key to restoring discipline and public trust in Bangladesh’s insurance sector, speakers underscored at a discussion held at the Dhaka Reporters Unity (DRU) on Saturday (Nov 22). Organised by Insurance News BD, the session brought together industry leaders who discussed that most of the sector’s persistent structural failures can be resolved simply by using the power already embedded in the existing law.

Throughout the discussion, participants stressed that the 2010 Act provides a wide-ranging mechanism for monitoring, investigation, governance correction and economic recovery. They cited provisions for special audits, appointment of administrators, removal of corrupt directors and chairman and recovery of misappropriated funds- tools they say remain underutilised by the Insurance Development and Regulatory Authority (IDRA). Instead of enforcing these measures, the regulator has proposed extensive amendments that experts fear may cause more loss than improvement.

Speakers said that the proposed removal of Schedule-1 and the shift of authority over the appointment of key company officials- comprising chairmen, CFOs, additional managing directors and company secretaries- could undermine corporate governance and make conflict between regulators and elected boards. Such intervention, they warned, may push shareholders to challenge IDRA’s decision in court, likely disabling companies and destabilising the wider industry.

Participants also expressed concern that IDRA has taken no significant step to improve conditions in either the life or non-life insurance sector since the mass uprising in July. Long-standing problems- like unpaid claim, illegal commission, misappropriated policyholders’ fund and stalled investigation- remain unresolved, despite the law offering a clear pathway to address them.

Questions regarding IDRA’s institutional capacity dominated much of the dialogue. The authority, established 14 years ago, still relies heavily on assigned civil servants who lack technical expertise in insurance operation, risk management, actuarial science and product design. Many contributors suggested that giving a capacity-constrained regulator more discretionary power could result in arbitrary decision-making, regulatory overreach and fresh opportunities for corruption.

In his keynote paper, former IDRA member (Life) Sultan-ul-Abedin Molla highlighted how the amendment proposal alters the balance between regulatory control and sectoral development. Although the Act currently contains 160 main sections, the amendment pursues to modify or replace 61 of them and add 64 entirely new sections. Molla discussed that the amendment dramatically expands IDRA’s authorities concerned but offers no meaningful strategy for the development, modernisation, or risk-based supervision of the industry. He warned that excessive control, if exercised without transparency and capacity, could erode confidence among policyholders and discourage the public from purchasing insurance altogether.

Speakers raised additional concern over confusing definitions in the proposal, including vague criteria for ‘significant shareholders,’ inconsistency in defining ‘family,’ and ambiguous requirement for senior management approval. They questioned why certain longstanding concept- like shareholders’ funds and policyholders’ funds- are being reintroduced as if they were new, even though they have existed in the 2010 Act for more than a decade. Many also noted that policyholders’ funds were never established over the past 15 years, despite clear legal provisions permitting them.

The discussion emphasised a worrying disconnect between the rising number of insurance companies and the shrinking number of customers. According to BIPD Secretary General Kazi Md Mortuza Ali, life insurance policyholders dropped from around 10 million to roughly 5 million after the formation of IDRA, raising concerns about the regulator’s effectiveness and the industry’s credibility.

Several speakers questioned the wisdom of advancing sweeping amendments under an interim government, cautioning that a future parliament may choose not to endorse them. Such a reversal could abolish the entire reform effort and further delay the sector’s recovery. Participants called for broad, inclusive consultation and a step-by-step reform strategy anchored in strict enforcement of the existing law.

Moderated by Moshtafizur Rahman Tungku, Editor and Publisher of Insurance News BD, the discussion featured insights from Sultan-ul-Abedin Molla, BIPD Secretary General Kazi Md Mortuza Ali, Pranab Majumder of Arthokagoj, DRU Vice President Gazi Anwar and other industry voices. Their message was unified: Bangladesh does not need a new law- it needs the courage and competence to enforce the one it already has.