Finance Minister Amir Khosru Mahmud Chowdhury has announced strict measures to curb widespread irregularities, mismanagement, disorder and corruption in Bangladesh’s insurance sector, stressing that companies must settle customers’ claims within specified deadlines.

He made the remarks while speaking to journalists after visiting the office of the Insurance Development and Regulatory Authority (IDRA) in the capital on Monday (September 14).

The finance minister said around 57% of insurance claims remain unsettled, meaning 57 out of every 100 claims are still unpaid.

“This situation is not acceptable in any way,” he said, adding that insurance companies would be given specific deadlines to settle outstanding claims.

Companies that fail to pay customers within the stipulated timeframe will face action, he said. If insurers lack sufficient cash to settle claims, they may be required to sell land or other assets to meet their obligations.

“People buy insurance with their hard-earned money to secure their future. How can they be deprived of that money?” Khosru said.

He noted that some claims have already been settled and that the IDRA chairman had taken an initiative to settle one claim as an example. However, he stressed that settling customers’ claims is primarily the responsibility of the respective insurance companies, not the regulator’s chairman.

Drawing parallels with the banking sector, Khosru said the government had found extensive mismanagement, corruption and weak regulation in the insurance industry after taking office.

He said the insurance law would be amended where necessary to strengthen regulatory controls, with a more effective oversight framework similar to reforms being pursued in the banking sector. The proposed changes are expected to be placed before parliament.

The government also plans to introduce risk-based supervision in the insurance sector, he said. All insurance companies will gradually be brought under an automated system, while transactions will have to be conducted digitally.

Khosru said greater direct or physical interaction among stakeholders creates more opportunities for corruption. Therefore, insurance companies, IDRA, Bangladesh Bank, the Bangladesh Securities and Exchange Commission and other relevant institutions will be brought under an integrated system.

Regarding allegations that some insurers maintain two servers, he said instances had been found where one server was used to preserve actual information while another was allegedly used for different transactions.

“No insurance company will be allowed to maintain two servers from now on,” he said, adding that inspections would begin after the stipulated period and action would be taken if any company was found operating two servers.

He stressed that insurance companies must ensure transparency in all financial transactions and operations and fully comply with regulatory requirements. Partial compliance, he said, would not be acceptable.

The finance minister said the financial and operational condition of several insurers was extremely concerning. Seven to eight companies had reached a stage where their continued operation itself was a matter of concern, he said, adding that action was being taken against them.

Such companies would be required to resolve their problems within a short period in line with regulatory directives. Those unable to do so would face alternative measures, he said.

Khosru declined to comment on the possibility of mergers among insurance companies, saying the government would take whatever steps were necessary. He said it would be inappropriate to make premature comments before the plans were fully prepared.

He also pointed to shortages of both manpower and skilled professionals at IDRA. The regulator needs not only adequate staff but also competent and professionally trained personnel, he said.

Over the next three to five years, the government plans to gradually reduce the number of officials working at IDRA on deputation and develop its own permanent workforce. These employees will receive necessary training to build expertise in insurance regulation and supervision.

“Insurance is a specialised profession,” Khosru said, stressing the need to bring professionals with relevant academic knowledge and practical experience into IDRA.

He also said numerous court cases and stay orders related to the insurance sector were creating obstacles to implementing regulatory decisions. Some parties, he said, were going to court to avoid regulatory measures and attempting to exploit the legal process for their own benefit.

To address the issue, changes will be made to the insurance law as well as IDRA’s management structure, he said.

Highlighting the government’s goal of bringing Bangladesh’s insurance sector up to international standards, Khosru said insurance plays a vital role in economies worldwide and professionals in the sector enjoy a respected position in many countries.

Insurance companies can make a significant contribution to Bangladesh’s economic development, he said, noting that insurance extends beyond life coverage to people’s assets, businesses, homes, furniture, electronic products and other areas.

However, Bangladesh has yet to fully realise the potential of the sector, he said.

Khosru acknowledged that the roots of irregularities and corruption in the insurance sector run deep.

“The disorder, lack of regulation and corruption have gone so deep that changing the situation will be difficult. But this difficult task must be undertaken in the interest of the people of Bangladesh,” he said.

He warned that efforts to strengthen regulation could trigger resistance from those benefiting from irregular practices, who might attempt to weaken the regulator and restore the previous system.

“But they will not be given that opportunity. That path has been closed,” he said.

From now on, insurance companies will have to operate in compliance with the law, under proper regulation, with professionalism and within the new digital framework, the finance minister said.