A sharp increase in fuel prices is putting additional financial pressure on Bangladesh’s insurance sector, raising travelling costs for field agents while adding to the operating expenses of insurance companies. The increase has also prompted concern over whether insurers will be able to keep their management expenditure within the limits prescribed by law.

The government raised the retail prices of all types of fuel by Tk 20 per litre, with the new rates coming into effect from midnight on Monday, 21 September. Diesel is now priced at Tk 135 per litre, octane at Tk 165, petrol at Tk 160 and kerosene at Tk 155.

The latest prices are considerably higher than those recorded at the end of 2025. In December last year, diesel was sold at Tk 104 per litre, kerosene at Tk 116, petrol at Tk 120 and octane at Tk 124. Octane has therefore increased by Tk 41 per litre, or more than 33 per cent, in less than a year.

The rise is particularly significant for insurance companies because a large part of their business depends on field-level operations. Agents and development officers regularly travel to meet customers, collect premiums and seek new policyholders. Many of them rely on motorcycles for their daily work.

An agent at a life insurance company, speaking on condition of anonymity, said the higher fuel prices had significantly increased the cost of travelling between customers. However, commission rates had remained unchanged, meaning agents were having to absorb much of the additional expense themselves.

The agent said field representatives often spend most of the day travelling from one customer to another. With fuel costs rising sharply, continuing to pursue new policies at the same level has become increasingly difficult.

Another insurance employee said the additional financial burden extended beyond motorcycle fuel. Other costs associated with travelling had also increased, while transport allowances and other benefits provided by companies had not been adjusted. As a result, the gap between income and field expenses has widened for some commission-based employees.

The pressure is not confined to individual agents. Insurance companies themselves are expected to face higher costs for operating their own vehicles and meeting employee travel expenses.

Under guidelines issued by the Insurance Development and Regulatory Authority (IDRA), an insurance company’s chairman and chief executive may each use a vehicle costing up to Tk 4 million from company funds. A company may also operate four vehicles in its transport pool, with a maximum value of Tk 2.5 million for each vehicle. Vehicles may also be allocated to senior officials.

The scale of vehicle-related expenses can be seen from financial reports of several leading insurers. One life insurance company alone has 268 vehicles, including private cars, microbuses and motorcycles.

IDRA data from 2018 showed that 28 life insurance companies had 1,841 vehicles, while 46 non-life insurance companies had 1,128. Fuel expenses for company-owned vehicles, along with travelling and conveyance costs, are treated as management expenditure.

Financial reports from 23 life and non-life insurance companies also provide an indication of the sector’s fuel bill. In 2025, 11 life insurance companies spent Tk 123,631,871 on fuel. Twelve non-life insurers spent Tk 30,653,554.

If fuel consumption remains at a similar level, the 33 per cent increase in fuel prices could push the fuel expenditure of those 11 life insurers to about Tk 163,194,070. That would be an increase of Tk 39,562,199 compared with their 2025 spending. Non-life insurers are also expected to face higher fuel costs as a result of the price increase.

The additional expenditure has raised concerns over compliance with statutory limits on insurance companies’ management costs. Under the Insurance Act 2010, spending above the prescribed management-expense ceiling constitutes an offence and may result in penalties.

The government has introduced separate rules governing the maximum management expenditure of life and non-life insurers. These include the Non-Life Insurance Business Management Expenditure Maximum Limit Determination Rules 2018 and the Life Insurance Business Management Expenditure Maximum Limit Determination Rules 2020.

The central concern for insurers is whether the regulator will take the higher cost of fuel into account when assessing management expenditure. So far, IDRA has not issued any specific instruction on whether additional fuel-related costs will receive special consideration under the existing framework.

SM Nuruzzaman, joint secretary-general of the Bangladesh Insurance Forum (BIF), which represents the chief executives of insurance companies, said the increase in fuel prices would directly affect insurers’ operating and management costs.

He said companies would have to spend considerably more on fuel for their own vehicles as well as on travel allowances for employees. If the statutory ceiling on management expenditure is not adjusted or otherwise addressed, insurers could find it increasingly difficult to absorb the additional costs while remaining within the prescribed limits.

Nuruzzaman said the industry expected the regulator to take the changed operating environment into consideration and issue appropriate guidance.

IDRA spokesperson Sadik Arman said the regulator was aware of the recent increase in fuel prices. He said the authority would take necessary measures to address the situation arising from the higher costs.

For the insurance industry, the fuel price increase therefore creates pressure at several levels. Field agents face higher costs while travelling to customers, companies face larger bills for their own vehicles and employee travel, and management expenses remain subject to statutory limits.

The impact on individual insurers will depend on factors including the size of their vehicle fleets, the extent of their field operations and how much they spend on fuel and travel. The response from the regulator will also be significant in determining how insurers deal with the additional costs while complying with the existing rules on management expenditure.