New measures planned to tackle insurance fraud in Bangladesh

News Desk: Bangladesh is moving to strengthen its legal and regulatory framework to combat insurance fraud, as authorities review existing laws and propose tougher enforcement measures following recent sectoral concerns.

Insurance fraud in the country is primarily governed by the Insurance Act 2010 and the Penal Code 1860, with additional provisions under the Money Laundering Prevention Act 2012 for large-scale financial crimes.

Under Section 130 of the Insurance Act 2010, offences such as false statements and the use of forged documents can result in fines of up to Tk 5 lakh or imprisonment for up to three years. The act also provides administrative penalties ranging from Tk 1 lakh to Tk 10 lakh for regulatory violations, including issuing unauthorised policies, delaying claim settlements and breaching tariff rules. The Insurance Development and Regulatory Authority (IDRA) is responsible for enforcing these provisions.

Criminal offences related to insurance fraud fall under the Penal Code 1860. Sections 415 to 420, which address cheating, carry penalties of up to seven years’ imprisonment and/or fines. Forgery-related offences under Sections 463 to 465 may result in imprisonment of up to two years and/or fines, while falsification of accounts under Section 477A carries penalties of up to seven years’ imprisonment and/or fines.

Regulatory scrutiny has intensified following recent developments in the insurance sector. In 2025, alleged embezzlement involving several life insurance companies reportedly led to the misappropriation of policyholder funds through unauthorised transactions, according to media reports. The Insurance Development and Regulatory Authority imposed financial penalties in response, although industry observers have questioned whether such measures are sufficient to deter large-scale misconduct.

In response, IDRA has proposed a series of amendments aimed at strengthening consumer protection and enforcement capacity. The proposed reforms include provisions for recovering embezzled funds by liquidating directors’ personal assets, expanding regulatory authority over asset and liability transfers and introducing stricter punitive measures.

As of March 15, 2026, the proposed amendments remain under review pending stakeholder consultation. Regulators and industry stakeholders continue to call for stronger enforcement and enhanced criminal sanctions to restore public confidence in Bangladesh’s insurance sector.