IDRA sets 3% expense limit on foreign head office cost for life insurers

Staff Correspondent: Bangladesh’s insurance regulator the Insurance Development and Regulatory Authority (IDRA) has imposed a new limit on life insurers, whose main place of business is outside the country, allowing them to charge head office expenses up to 3% of annual net premium income from their Bangladesh life insurance portfolio.

The (IDRA) introduced the measure by adding a new regulatory rule 4 to the Life Insurance Business Management Expense Maximum Limit Rules, 2020. The amendment was published in the official gazette on January 13, 2026, providing long-awaited clarity on how many foreign-headquartered insurers may allocate to head office costs and remit abroad.

The fresh rule sets out three key guardrails. Firstly, the head office expense component is capped at 3% of net premium income for the relevant year. Secondly, IDRA specifies that this amount must remain in the overall management expense limit under rule 3; meaning insurers cannot treat head office expenses as an additional allowance on top of existing limit. Thirdly, any transfer of funds abroad for head office expenses will need prior approval from IDRA before remittance.

The change addresses a regulatory gap that persisted since the 2020 rules were introduced. Although the Insurance Act, 2010 recognised that management expenses may include a proportionate share of head office expenses where the main business location is out of the country, it did not set a percentage or define remittance condition.

Regulators and industry observers say the cap and approval requirement should strengthen transparency, prevent inflated allocation and safeguard policyholders by ensuring premium income is not excessively drained through cross-border expense charges.