Bangladesh’s insurance companies have been given six weeks to shut down any undisclosed or additional servers and bring all operational and financial information under a unified system, as the insurance regulator moves to strengthen transparency and oversight across the sector.
The directive was announced by Mir Nadia Ninvine, chairman of the Insurance Development and Regulatory Authority, at the opening of a workshop organised by the Insurance Reporters Forum at the Bangladesh Academy for Rural Development in Cumilla.
Ninvine said a number of insurance companies were allegedly failing to provide regulators with a complete picture of their actual financial and business conditions. The use of multiple or undisclosed servers, she said, had created scope for companies to keep information on business operations, premium income and other financial activities outside the data submitted to the regulator.
Such discrepancies can make it difficult for the regulator to assess the actual financial health and risks of an insurance company. If information is distributed across separate systems, the regulator may not have access to the full picture when evaluating a company’s liabilities, income and overall operations.
The regulator has therefore instructed all insurers to shut down hidden and additional servers within six weeks and integrate their information into a single, coordinated system. Companies that fail to comply will face legal action, according to the chairman.
Ninvine also warned that attempts to conceal servers would not necessarily prevent detection. She said technological audits could identify servers hidden in places such as garages, under beds or other undisclosed locations.
Risk-based supervision planned by December
The regulator is also preparing to introduce a risk-based supervision system by December this year, marking a significant shift in the way insurance companies are monitored.
Ninvine said audited financial statements alone could not always provide an accurate picture of a company’s current condition. An audit report may relate to an earlier period and, if it does not fully reflect the company’s actual position, regulators can struggle to identify emerging weaknesses and financial risks in time.
Under the proposed system, greater attention will be given to companies’ financial condition, business activities, consistency of reported information and potential risks. The approach is intended to allow regulators to focus more closely on companies that show signs of financial weakness or irregularities.
Individual identification numbers for insurance policies
The regulator also plans to introduce a unique identification number for every insurance policy within the next three to four months.
The proposed system would allow each policy to be identified centrally, making it easier to track policies and verify related information. It is expected to reduce opportunities to report fictitious premium income, disclose only part of a company’s business activity or withhold relevant information.
A separate verification mechanism is also being planned for general insurance. Under the proposed arrangement, banks would be able to verify insurance cover-note information through the regulator’s system before opening letters of credit for imported goods.
The authorities also plan to restrict the acceptance of cover notes that do not carry the proposed unique identification number. The move would create an additional layer of verification between insurance documentation and import-related financial transactions.
Claims of financially troubled insurers to be addressed
Alongside the proposed reforms, the regulator is preparing to begin paying outstanding claims to customers of several financially distressed insurance companies.
Ninvine said the process would begin next week for customers of seven to eight financially troubled insurers. Funds recovered through the sale or encashment of company assets will be used to settle outstanding claims.
The assets include land, government securities and fixed deposits. Money recovered from such assets is being kept in separate bank accounts under the regulator’s supervision and will subsequently be used to meet customers’ legitimate claims.
Giving an example of one distressed insurer, Ninvine said the company owed customers nearly Tk30 billion. An initial amount of several hundred crore taka is expected to be raised through the sale of land in Feni and the encashment of some government securities, with the proceeds earmarked for claim payments.
The initiative comes amid longstanding concerns over delayed claim settlements and the financial weakness of some insurers. Recovering and using available assets to meet outstanding obligations could provide at least partial relief to affected policyholders.
Multiple agencies to help verify insurers’ information
The insurance regulator also intends to work in coordination with Bangladesh Bank, the National Board of Revenue and the Bangladesh Securities and Exchange Commission to reduce opportunities for insurers to conceal information.
Data held by different government agencies could be compared with information submitted by insurance companies, helping regulators identify inconsistencies and verify the accuracy of financial and business records.
The proposed cooperation is particularly significant because insurance companies have links with a range of financial and commercial activities. Cross-checking information from different official sources could give regulators a clearer understanding of a company’s actual transactions and financial position.
Technology seen as essential to stronger oversight
According to Ninvine, the regulator currently oversees 82 insurance companies but has a workforce of only around 150 people. Monitoring such a large sector with limited manpower presents a considerable challenge.
She said stronger technological capacity and an improved legal framework would therefore be necessary to make supervision more effective.
The six-week deadline for shutting down undisclosed servers is part of a broader effort to improve the quality and reliability of information available to the regulator. The planned risk-based supervision system and unique policy identification numbers are also intended to make monitoring more systematic.
For policyholders, the effectiveness of these measures will ultimately depend on how consistently they are implemented. Bringing insurers’ data into a unified system, verifying information across government agencies and identifying financial risks at an earlier stage could strengthen accountability across the industry while helping regulators respond more quickly when companies face financial difficulties.
