Bangladesh Bans Non-Life Insurance Agent Commissions

Bangladesh’s insurance regulator, the Insurance Development and Regulatory Authority (IDRA), has introduced a landmark reform in the non-life insurance sector by scrapping agent licences and banning all commission payments. Announced on 7 January 2026, this directive effectively prohibits the country’s 45 non-life insurers from employing agents for premium collection, marking one of the most significant regulatory interventions in Bangladesh’s insurance market in recent years.

In a statement, IDRA emphasised that any violation of the directive will attract strict punitive action, underscoring the regulator’s intent to eliminate commission-driven business practices that have historically undermined underwriting discipline and policyholder protection. The move aims to curb excessive reliance on agent-led sales and encourage insurers to prioritise risk assessment, pricing accuracy, and timely claims settlement.

Industry observers note that uncontrolled commission payments were a major factor contributing to the sector’s historically low claim settlement ratio. Non-life insurers frequently offered disproportionately high commissions to agents to capture a share of a relatively small market, often prioritising premium volume growth over prudent underwriting standards. This practice resulted in distorted pricing, weak risk management, and delays in claim settlements, undermining the sector’s credibility.

According to IDRA’s Annual Report 2023-24, global non-life insurance accounted for 59.80% of total premiums. In contrast, in Bangladesh, the life insurance sector continues to dominate. In 2023, life insurance collected BDT 123 billion ($1.1 billion) in premiums, while the non-life sector managed just BDT 60 billion, settling only 35.54% of total claims. This imbalance highlights systemic inefficiencies and the urgent need for regulatory correction.

Experts predict that the removal of agent commissions will incentivise insurers to focus on underwriting quality, effective risk management, and timely claims settlement, gradually restoring market discipline and increasing consumer confidence in the non-life sector.

Key statistics for Bangladesh’s insurance sector in 2023 are summarised below:

This regulatory overhaul is expected to guide Bangladesh’s non-life insurance industry towards sustainable growth, enhanced transparency, and stronger policyholder protection, representing a turning point in the sector’s development.