IDRA issues new FIV framework for motor insurance valuation

Staff Correspondent: Bangladesh’s Insurance Development and Regulatory Authority (IDRA) has moved to end long-standing confusion over vehicle valuation in motor insurance by setting clearer rules for determining the Full Insured Value (FIV)- a key symbol that directly influences premium calculation and claim payout.

In a fresh directive, IDRA said that for brand-new and reconditioned vehicles, the showroom invoice price must be treated as the FIV. The regulator’s move is intended to establish a uniform benchmark at the underwriting stage, limiting arbitrary valuation practices that often lead to disagreement when claims are filed.

According to the IDRA sources, the decision was shaped by recommendation from the Central Rating Committee’s 187th meeting held on 9 December 2025 and subsequently approved at IDRA’s 193rd meeting on 6 January this year. The instruction has been issued through Circular No. Non-Life 110/2026.

For used vehicles, the circular allows insurers and policyholders to fix the FIV through mutual discussion based on the existing market price, but mandates that valuation must follow the age-based depreciation schedule set out in the earlier Motor-15/2009 circular (1 November 2009). Depreciation remains 0% up to one year, then increases to 10% (1-2 years), 15% (2–3), 20% (3–4), 25% (4–5), 30% (5–6), 40% (6–7) and 50% for vehicles older than seven years.

According to the industry insiders, the clearer framework will improve transparency, speed up claim settlement and reduce conflict- strengthening trust in Bangladesh’s motor insurance market.