Insurance Fee Hike Faces Legal Challenge

A legal notice has been served demanding the cancellation of the Insurance Business Registration Fee (Amendment) Regulations, 2024, which introduced a substantial increase in the renewal fees applicable to insurance companies. The notice also calls for an immediate suspension of the revised fee collection process.

The notice was issued in the public interest on Monday (20 April) by Supreme Court lawyer Tanay Kumar Saha. It has been addressed to the Secretary of the Finance Division and the Chairman of the Insurance Development and Regulatory Authority.

The petitioner has requested that the implementation of the amended regulations be suspended within seven days. It further seeks reinstatement of the earlier fee structure, requiring insurance companies to renew their licences under the Insurance Business Registration Fee Rules, 2018. The notice also states that, if the demand is not met, a writ petition will be filed with the High Court Division under Article 102 of the Constitution of Bangladesh in the public interest.

According to the notice, the 2018 framework fixed the renewal fee at BDT 1.00 per thousand of gross premium. The 2024 amendment has revised this structure, resulting in a significant increase in payable fees for insurance operators.

For instance, under the previous system, an insurance company with a gross premium of BDT 100 crore was required to pay a renewal fee of BDT 10 lakh. Under the amended 2024 regulations, this amount has been raised to BDT 25 lakh. The notice further notes that the fee is expected to increase to BDT 50 lakh by 2032, based on the revised calculation framework.

Fee comparison overview

The notice argues that the revised fee structure represents an increase ranging from approximately 150 per cent to 500 per cent, depending on projections, and describes it as excessive in relation to the earlier regulatory framework.

It is also stated that several insurance companies had already fulfilled their obligations by paying renewal fees and completing licence formalities under the 2018 rules prior to 30 November 2025. The notice contends that applying the 2024 amendment to previously completed compliance activities in 2026 is inconsistent with the established legal principle that legislation should operate prospectively rather than retrospectively.

The notice further claims that the increased fees will reduce the surplus funds available to insurance companies. It argues that this may affect policyholders through reduced bonus distributions and impact shareholders through lower dividend payments, potentially placing pressure on the overall financial stability of the insurance sector.

Additionally, the notice alleges that the revised fee structure effectively transfers administrative costs onto insurance operators and ultimately consumers. It asserts that such regulatory expenses should be borne by the Finance Division rather than being recovered through increased fees imposed on the insurance industry.