Bangladesh set to increase insurance renewal fees as industry expresses growing concern

Staff Correspondent: Bangladesh’s insurance regulator is preparing to execute a major increase in registration renewal fees for life and non-life insurers, a move it says is essential to strengthen regulatory capacity but one that industry players warn could worsen the sector’s economic distress. The Insurance Development and Regulatory Authority (IDRA) has finalised amendments to the Insurance Business Registration Fee Rules, 2012 and submitted them to the Financial Institutions Division for final approval and gazette publication.

The proposal raises renewal fees from Tk 1 to Tk 5 per Tk 1,000 of gross premium, with the full rate set to take effect from 2030 following a phased approach beginning in 2026. IDRA Media and Communication Consultant and Spokesperson Saifunnahar Sumi confirmed that the gazette notification is expected to be issued soon.

The planned hike has provoked concern among insurers, many of whom are dealing with governance weaknesses, cash-flow shortage and delays in settling customers’ claims. Several companies have reported difficulties in maintaining regular salary and benefit payment to employees. The management says that increasing renewal fees at such a scale risks intensifying economic pressure on an industry already struggling to maintain public trust. They resist that if the revised fee cannot be made tax-exempt, overall management expenses will rise, limiting the capability of insurers to improve service quality or strengthen the internal system. Some worry the new structure could also trigger greater scrutiny from tax authorities concerned, adding to compliance burden.

IDRA defends the increase by saying that the existing fee level is no longer sustainable. While the original 2012 rule set the fee at Tk 3.50, it was reduced in 2018 after comparing Bangladesh with India’s insurance market. The regulator now says that the comparison is not realistic. India’s insurance sector makes around INR 6 trillion in annual gross premium, enabling its regulator to earn significant revenue even with relatively low fees. Bangladesh’s much smaller premium base limits IDRA’s capability to fundraising regulatory responsibilities.

The regulator anticipates major cost increases driven by digital infrastructure expansion, enhanced supervisory capacity, pension and gratuity obligation and the establishment of new professional training institutions. IDRA maintains that without additional revenue, its capability to modernise the regulatory framework and support sector-wide development will remain constrained.