Policyholders Left Waiting as Life Insurers Accumulate Thousands of Crores in Arrears

Bangladesh’s life insurance sector is facing a profound crisis of credibility as a majority of insurers continue to withhold legitimate claim payments from policyholders, triggering widespread concern over regulatory oversight, financial discipline, and consumer protection. Official data reveal that nearly two-thirds of all life insurance claims submitted during the first nine months of the year remain unpaid, underscoring what industry experts describe as a systemic governance failure rather than isolated corporate weakness.

According to a recent assessment prepared by the Insurance Development and Regulatory Authority (IDRA), life insurance companies operating in the country received claims totalling Tk 5,986.48 crore between January and September. However, insurers disbursed only Tk 2,105.90 crore during this period, leaving Tk 3,880.58 crore outstanding. This means just 35 per cent of submitted claims were honoured, while the remaining 65 per cent remain unpaid.

The most alarming feature of this crisis is its concentration. More than 90 per cent of the unpaid claims originate from only seven life insurance companies, suggesting chronic mismanagement rather than sector-wide incapacity. These companies include Far East Islami Life Insurance, Padma Islami Life Insurance, Progressive Life, Sunflower Life Insurance, Golden Life, Homeland Life, Bayra Life, and Sun Life Insurance. In several of these firms, claim settlement rates are negligible, raising serious questions about their financial solvency and operational ethics.

Far East Islami Life Insurance stands out as the most severe case. The company received claims amounting to Tk 2,815 crore during the nine-month period but managed to pay only Tk 34.95 crore. As a result, nearly 99 per cent of claims remain unsettled. This staggering imbalance highlights the extent to which policyholders’ funds may have been diverted or misused, leaving the company effectively unable to meet its contractual obligations.

Other insurers exhibit similarly troubling patterns. Bayra Life settled only Tk 40 lakh against claims of Tk 79.68 crore. Padma Islami Life paid Tk 2.14 crore out of Tk 257.42 crore in claims, while Homeland Life paid just Tk 63 lakh against Tk 34.84 crore. Sunflower Life settled less than Tk 4 crore against claims exceeding Tk 194 crore. In each case, unpaid claims vastly exceed payments, pointing to structural insolvency rather than temporary liquidity stress.

Industry leaders warn that the behaviour of a handful of companies is eroding trust across the entire insurance sector. Progati Life’s Chief Executive Officer, Md Jalalul Azim, has argued that insurers failing to pay claims should not be permitted to issue new policies. He believes that continuing to allow such companies to collect premiums while withholding payouts is deepening the confidence crisis and penalising responsible insurers.

Despite the bleak outlook, a number of companies have demonstrated that proper governance is possible. Alpha Life, LIC Bangladesh, Mercantile Life, and Sonali Life have each achieved a 100 per cent claim settlement rate during the period. Popular Life also performed strongly, settling nearly 98 per cent of its claims. These examples suggest that the crisis is not inevitable but stems from regulatory lapses and corporate malpractice.

Unless decisive action is taken, analysts warn that public confidence in life insurance may collapse altogether. Without trust, the sector’s role in long-term savings, social security, and financial inclusion will be irreparably damaged.