Due to the “Popular Uprising” or mass movement in July-August of 2024, it has been decided that even if there is R&D coverage under Standard Fire Policy (SFP) or Industrial All Risks (IAR) policy, no insurance claim will be payable.

In the meeting held to make this decision, relevant stakeholders, particularly notable trade organizations in the country and representatives from the textile industry, were not included. In fact, no representatives from the affected policyholders were included in the decision-making process regarding such an important issue as claim settlement. This has caused significant concern among representatives of the affected industries and businesses. They have demanded the cancellation of this decision, calling it one-sided and against the country’s industrial and economic interests. It is reported that this decision was made at a meeting held on March 3rd.

Expressing concern, the President of the Bangladesh Textile Mills Association (BTMA), Shoukat Aziz Russell, sent a letter to the Chairman of the Insurance Development and Regulatory Authority (IDRA) demanding a thorough reconsideration and cancellation of the decision regarding insurance claims. In the letter, he requests the Chairman’s intervention to annul the one-sided, flawed, and anti-national interest decision and to come up with an acceptable solution within 90 days in accordance with the Insurance Act, 2010, for the settlement of claims after the necessary documents are received.

According to sources, during the final and subsequent stages of the government collapse movement, some criminals and unruly workers attacked, set fire to, and looted various factories and commercial establishments in industrial and commercial zones, causing significant damage to the country’s economic infrastructure. However, these factories and commercial establishments were not the targets of the movement or the anger of the protesters. Some criminals took advantage of the unstable political situation to carry out sabotage and looting for ulterior motives.

It is reported that most of these factories and commercial establishments were insured with various kinds of coverage, but on March 3rd at 10 AM, a meeting was held at the head office of the only state-owned non-life insurer, General Insurance Corporation, attended by the chief executives/representatives of all insurance companies and senior surveyors/representatives of survey firms. The meeting discussed the claims raised by the affected factories and commercial establishments. Representatives from various insurance and survey firms presented explanations of the damage and loss. The speakers at the meeting expressed deep concern over the economic stability and balance of the country due to the damages caused by these attacks and losses in factories and commercial establishments. They emphasized the need for specific and effective steps for compensation and replacement.

However, the General Insurance Corporation, in its statement, referred to foreign reinsurers and defined the losses as “Popular Uprising,” civil commotion, and terrorism-related damage, stating that the loss is not covered under fire insurance and IAR policies.

It is known that under such circumstances, the owners of the affected factories and businesses are experiencing extreme despair, as without resolving the claims or compensation, it will be impossible for them to restore or restart their factories and businesses. Additionally, the bank loans associated with these institutions will become unmanageable, leading to an increase in the amount of defaulted loans.

In the letter sent to the Chairman of IDRA, it is mentioned that in July-August of 2024, a mass movement occurred in the country, leading to the fall of the then government on August 5th. People from across the country, especially in the capital city and district centers, participated in the movement. In this context, representatives of various affected industries and businesses have expressed deep concern after learning about the decision made at a meeting held on March 3rd under the chairmanship of the General Manager of Reinsurance at General Insurance Corporation, which stated that the losses resulting from these events would not be compensated under SFP or IAR policies due to being defined as “Popular Uprising” or civil commotion.

The letter also states that this decision is one-sided and against the national interest, requesting that the decision be reversed. The reasons for this are:

1. Lack of Stakeholder Participation: The decision was made without the participation of the relevant stakeholders, which violates the principles of justice and fairness. The insurance contract involves two primary parties: the insurer and the insured. However, it is regrettable that the affected policyholders were not included in the decision-making process for such a significant matter. This violates the fundamental legal principle of ‘Audi Alteram Partem’ (hearing the other side) and weakens the decision-making process.
2. Violation of Constitutional Rights: Article 31 of the Constitution of Bangladesh clearly states that no person’s life, liberty, body, reputation, or property shall be harmed except in accordance with law. In this case, denying the legitimate right (such as receiving an insurance claim) without a hearing is contrary to Article 31, as such a decision without due process is a violation of legal procedure.
3. Mislabeling the Event as ‘Popular Uprising’: According to the minutes of the meeting, all incidents from July 16th onward were labeled as “Popular Uprising.” However, the reality is that not all violent incidents during this period were of the same nature. Many were acts of personal vendettas, looting, or deliberate arson. These incidents fall under the definitions of riots, civil commotion, or malicious damage, which are covered under R&D (Riots & Civil Commotion) coverage. Therefore, claims should be settled within 90 days as per the Insurance Act, 2010.
4. Failure to Consult International Examples and Reinsurers: There are several international examples where insurance companies have settled claims arising from political unrest. For example, insurance companies provided compensation for damages during political riots in Thailand (2010) and London (2011). Similarly, in Indonesia, local insurers successfully negotiated with international reinsurers to resolve claims. It is believed that rather than shifting all the blame to foreign reinsurers, there is still an opportunity for effective dialogue by presenting the economic realities of the country and international precedents.

Internationally, governments and insurance institutions have taken special measures or created compensation funds to assist businesses affected by such instability. For example, in the UK, the Riot Compensation Act 2016 allows individuals or businesses affected by riots to claim compensation, and in the US, Minnesota approved a fund of $45 million for businesses affected by the 2020 riots.

The letter concludes that the main purpose of insurance is to provide financial security during times of crisis and to keep the economy running. If insurance claims are rejected based on a strict and narrow interpretation of laws and policies during a national crisis, it will not only bankrupt the affected institutions but also undermine public trust in the insurance industry. This would lead to a reluctance to purchase insurance, which would be catastrophic for the industry. Therefore, the Chairman of IDRA is requested to intervene and help find an acceptable solution for the claims within 90 days in accordance with the Insurance Act, 2010.