Cash Flow Shortages, Delayed Documentation Behind Rising Backlog

Unsettled insurance claims in Bangladesh have surged to a staggering Tk 72.49 billion, exposing systemic inefficiencies in claim settlements and intensifying pressure on the country’s insurance sector, sources say.

Data from the Insurance Development and Regulatory Authority (IDRA) reveals that a significant portion of claims in both life and non-life segments remains unpaid, raising concerns over liquidity stress and weak compliance among insurers.

In the life insurance sector, total claims reached Tk 62.61 billion during the July-September quarter of the current fiscal year, but only Tk 22.75 billion was settled—a settlement rate of just 36.34%. This leaves Tk 39.86 billion, nearly two-thirds of total claims, outstanding.

The backlog is even more severe in the non-life segment, where insurers settled only Tk 2.75 billion of Tk 35.37 billion in claims, a dismal 7.76% settlement rate. More than 92% of claims—Tk 32.63 billion remain unpaid.

Combined, unsettled claims across both sectors have reached Tk 72.48 billion, highlighting a systemic failure to ensure timely payouts to policyholders.

Industry insiders attribute the growing backlog to cash flow constraints, delayed documentation, and cumbersome verification processes, while policyholders increasingly complain of prolonged waiting periods.

Regulators are taking notice. IDRA has stepped up oversight, mandating detailed reporting on claim settlement performance and pushing for structural reforms to strengthen enforcement. High-level review meetings are also planned with state-owned Jiban Bima Corporation and Sadharan Bima Corporation to tackle persistent settlement delays.

Experts warn that unless insurers improve their payout capacity and efficiency, the ballooning unsettled claims could erode public trust and hinder sector growth in a market already grappling with low insurance penetration.

The Financial Institutions Division (FID) under the Ministry of Finance has issued an urgent directive to IDRA to produce a “company-wise comparative statement” of unsettled claims. According to a senior IDRA official, the government may summon managing directors of the worst-performing insurance companies to explain why over Tk 72.49 billion in policyholder money remains undisbursed.

“Insurance is a promise to pay,” said a senior FID official. “When funds of that promise remain unfulfilled, it is not just a financial issue; it is a crisis of national trust.”