Fuel Price Hike Raises Concern over Insurance Agents’ Expenses and Management Costs

Staff Correspondent: An increase in fuel prices has created new challenges for insurance companies in Bangladesh. Field-level insurance agents are facing higher travel costs, while companies are concerned that their overall management expenses may increase beyond the allowed limit.

The government has increased the price of all types of fuel oil by Tk 20 per litre. The new prices came into effect from midnight on Monday (21 September).

Currently, diesel is being sold at Tk 135 per litre, octane at Tk 165, petrol at Tk 160 and kerosene at Tk 155 in the retail market.

The latest increase means fuel prices have gone up by around 33% in less than a year. In December 2025, diesel was sold at Tk 104 per litre, kerosene at Tk 116, petrol at Tk 120 and octane at Tk 124. Compared with that period, the price of octane has increased by Tk 41 per litre.

Insurance market observers said the fuel price hike will increase several expenses of insurance companies, including vehicle fuel costs, employee travel expenses and transport allowances.

They said this may create extra pressure on companies to keep their management expenses within the limit set by regulation.

Insurance agents are among the groups directly affected by the fuel price increase. Most agents travel regularly to meet customers, collect premiums and sell new insurance policies.

However, their commission rates have not increased despite the rise in travel costs.

A field agent of a life insurance company, requesting anonymity, said, ‘We spend most of the day travelling by motorcycle to visit customers. Due to the fuel price increase, our travel costs have increased significantly, but our commission remains unchanged. It is becoming difficult to continue business by spending money from our own pockets.’

Another insurance worker said that the increase in expenses is not limited to fuel costs. Other costs related to travelling have also increased, but allowances from companies have not increased.

As a result, many commission-based insurance workers are becoming less interested in collecting new policies, he added.

Insurance companies are also likely to face higher operational costs due to the fuel price increase.

According to guidelines of the Insurance Development and Regulatory Authority (IDRA), the chairman and chief executive officer of an insurance company can use one vehicle each from company funds, with a maximum value of Tk 40 lakh per vehicle.

Companies can also maintain up to four vehicles in their transport pool, with each vehicle having a maximum value of Tk 25 lakh. Vehicles may also be provided to senior officials.

A review of financial reports of several leading life and non-life insurance companies found that one life insurance company alone has 268 vehicles, including private cars, microbuses and motorcycles.

According to IDRA data from 2018, 28 life insurance companies used 1,841 vehicles, while 46 non-life insurance companies used 1,128 vehicles.

Fuel expenses for company vehicles and travel-related expenses are included in the management costs of insurance companies.

An analysis of financial reports from 23 life and non-life insurance companies shows that 11 life insurance companies spent Tk 12.36 crore on fuel purchases in 2025.

Meanwhile, 12 non-life insurance companies spent Tk 3.06 crore on fuel during the same period.

Following the 33% increase in fuel prices, the fuel expenses of these companies are expected to rise significantly in 2026.

Based on the previous spending pattern, the fuel cost of the 11 life insurance companies may increase to around Tk 16.31 crore. This means their additional expense could be nearly Tk 3.96 crore.

Non-life insurance companies are also expected to face similar increases in fuel-related costs.

Under the Insurance Act, 2010, spending beyond the approved management expense limit is considered a violation. The act also includes provisions for penalties in case of excessive spending.

The government has introduced separate rules for controlling management expenses in life and non-life insurance businesses.

However, IDRA has not yet issued any specific instruction on whether the regulator will adjust the management expense limits considering the recent fuel price increase.

Bangladesh Insurance Forum (BIF) Joint Secretary General S M Nuruzzaman said the increase in fuel prices would directly affect insurance companies’ operating costs.

‘The fuel costs of company vehicles and travel allowances for employees will increase significantly. If IDRA does not consider adjusting the existing management expense limits, some companies may face penalties despite the increase being caused by higher market costs,’ he said.

He hoped that the regulator would consider the current situation and issue necessary guidelines for the industry.

When asked about the matter, IDRA spokesperson Sadique Al Arman said the authority was aware of the recent fuel price increase.

‘IDRA is aware of the current fuel price increase. The authority will take necessary steps to address the situation,’ he said.