The Bangladesh Insurance Association (BIA) is taking strict action against insurance companies that fail to settle claims on time, as part of efforts to restore trust in the sector, said BIA President Sayeed Ahmed on Tuesday.
At the same time, the BIA is calling for reforms in policies related to investment of insurance funds in secure sectors, so that insurance companies can access their deposits from banks and financial institutions after a set period, Sayeed Ahmed said at a press conference organised by the Capital Market Journalists’ Forum (CMJF) at its office in Paltan, Dhaka.
He said the insurance sector is grappling with various challenges, including the loss of customer trust.
He cited factors such as an unstable foreign exchange market, fluctuating interest rates, high inflation, and global issues like the Covid-19 pandemic and the Russia-Ukraine war as having a negative impact on the sector.
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Despite these challenges, the number of insurance policyholders has increased at a slow pace, reaching around 20 million policyholders across the country, he added.
The sector has suffered from mismanagement over the past 15 years, with a lack of accountability, he said adding that the previous BIA committee failed to safeguard the interests of the sector.
In response to a question, he revealed that over Tk 6,000 crore in insurance claims remained unpaid as of 2023.
He explained that insurance companies have been unable to settle claims because they are unable to withdraw their fixed deposits from banks and financial institutions.
Under the current policies of the Insurance Development and Regulatory Authority of Bangladesh (IDRA), insurance companies have invested in banks, financial institutions, and state-owned insurance firms.
However, after the maturity period, these institutions have been unable to repay the funds, leaving insurance companies unable to meet their customers' claims, he claimed.
He also mentioned that the first BIA committee formed through a participatory process was established just a month ago following the formation of the association in 1988.