Non-Life Insurers Mandate ‘Zero Commission’ Pledges for Managers

In a decisive move to sanitise the domestic insurance sector, the Bangladesh Insurance Association (BIA) has issued a formal directive to all non-life insurance companies, mandating that every branch manager sign a binding "letter of commitment." This initiative is designed to rigorously enforce the "Zero Commission Policy" recently instituted by the Insurance Development and Regulatory Authority (IDRA).

The directive was formalised in a letter dated Monday, 23 February, signed by BIA Secretary Md. Omar Faruque, and disseminated to the Chief Executive Officers (CEOs) of all non-life insurers across the country.

The End of Agent Commissions

The catalyst for this sweeping reform is the IDRA’s recent circular, which effectively suspended the licences of all non-life insurance agents nationwide. As of 1 January 2026, no agent licences remain valid, thereby legally precluding the payment of any commissions for policy procurement. By removing the financial incentive traditionally offered to intermediaries, the BIA and IDRA aim to reduce operational costs and curb the rampant "commission-sharing" culture that has historically plagued the industry.

Core Pledges Required from Branch Managers

Branch managers occupy a pivotal role in the front-line operations of insurance firms. To ensure there are no clandestine payments, the BIA has outlined specific terms that these managers must formally agree to:

Adherence to Regulatory Frameworks: Strict compliance with the Insurance Act and all subsequent directives issued by the IDRA.

Enforcement of Zero Commission: Taking personal responsibility to ensure that no commission is paid to any party for securing business.

Prohibition of Incentives: Refusing to grant or accept any form of indirect financial benefit, incentive, or kickback.

Premium Integrity: Ensuring that all premiums collected are deposited directly into the company’s official accounts through authorised channels.

Acknowledgement of Penalties: Accepting that any breach of these regulations will result in severe disciplinary action from both the company and the regulatory authority.

Regulatory Implementation Timeline

Impact on the Industry

The shift to a "Zero Commission" model represents a paradigm shift for non-life insurance in Bangladesh. Historically, the sector struggled with "management expenses" that often exceeded permissible limits due to high commission rates paid to agents.

The BIA has instructed all companies to notify the association immediately once the pledge collection process is complete. This collective action is expected to increase transparency, lower the cost of insurance for the general public, and foster a more professional environment where policies are sold based on merit and protection rather than financial kickbacks.