When Mir Nadia Nivin took the helm of Bangladesh’s Insurance Development and Regulatory Authority (IRDA) last month, she inherited a sector in acute distress: nearly Tk7,000 crore in unpaid insurance claims, a state-owned reinsurer that settled just 3.41% of its obligations in one quarter, and a public trust deficit severe enough to prompt multinational firms to pull back from the market. Her agenda, laid out at a media briefing in Dhaka on July 16, spans asset liquidations at seven distressed life insurers, a shift to risk-based supervision, enforcement action against hidden commission payments, and a unique policyholder identification system, according to The Business Standard. For insurance professionals watching Bangladesh, the significance lies less in the individual measures than in what they collectively reveal: a market where regulatory enforcement has lagged structural problems for years, and where the tools needed to fix it remain, in part, unlegislated.
The Tk7,000 crore figure did not emerge overnight. As of June 2025, insurance companies had received claims totalling Tk9,180 crore but paid only Tk2,246 crore, leaving Tk6,934 crore unsettled, according to The Business Standard. In the final quarter of 2025 alone, general insurers settled only Tk372 crore out of Tk3,971 crore in filed claims – a rate of 9.37%, according to a separate The Business Standard report.
A structural bottleneck sits at the centre of this: the state-owned Sadharan Bima Corporation, which by law must reinsure 50% of all non-life risk exposure in Bangladesh. In the October-December 2025 quarter, the corporation faced claims totalling Tk2,264 crore but settled only Tk77 crore – 3.41% of the total – leaving Tk2,187 crore unsettled. By law, insurers must settle valid claims within 90 days; in practice, industry sources say this rule is frequently ignored. Delays by the state reinsurer in settling its share often prevent primary insurers from paying policyholders on time, trapping the process in a chain involving surveyors, insurers, reinsurers, and regulators. The corporation has attributed delays to incomplete documentation submitted by primary insurers. Several large private insurers recorded claim settlement percentages lower than their dividend payout percentages in the same period, according to The Bangladesh Today. The backlog has prompted several multinational firms to reportedly scale back or withdraw insurance coverage in Bangladesh due to delayed settlements.
Nivin confirmed that Tk4,000 crore of the total outstanding amount is concentrated in seven life insurers – identified by The Financial Express as Fareast Islami Life Insurance, Padma Islami Life Insurance, Golden Life Insurance, Homeland Life Insurance, Sunflower Life Insurance, Baira Life Insurance, and Swadesh Islami Life Insurance. Assets – including government treasury bonds, fixed deposits in financially stable banks, and other marketable investments – will be liquidated in phases, with proceeds held in separately audited accounts and disbursed on a first-in, first-out (FIFO) basis. “If policyholders do not get their claims for years, people will lose interest in buying insurance. Our first priority is to begin settling outstanding claims as quickly as possible. Once claim payments start, confidence will gradually return,” Nivin said.
The urgency is sharpened by Bangladesh’s structural position as one of Asia’s most underinsured markets. Insurance penetration stood at approximately 0.33% of GDP in FY2024-25, based on total premiums of Tk18,534 crore – well below India’s approximately 4% and Vietnam’s figure above 2%. World Bank data place Bangladesh’s penetration rate at 0.5% of GDP for 2024, the lowest in Asia. Against that backdrop, a Tk7,000 crore claims backlog represents a significant share of total annual premium income and a direct obstacle to the sector’s development.
The announcement that IDRA will crack down on hidden commission payments – routed through inflated salaries and consultancy fees in the life sector – follows structural action already taken in non-life. IDRA scrapped all individual agent licences for the non-life sector with effect from January 1, 2026, following a November 2025 consultation at which all participating non-life CEOs pledged to operate without agent commissions. The regulator had by that point accumulated evidence that some insurers had concealed commission-related transactions through multiple software systems and undisclosed bank accounts. Bangladesh’s non-life companies settled only 35.54% of total claims in 2023, a figure that independent studies linked in part to financial erosion caused by unchecked commission discounting.
IDRA is moving away from its traditional compliance-based framework to a risk-based supervision model. A World Bank completion report published in April 2025 on the Bangladesh Insurance Sector Development Project – a US$65 million initiative – documented the long-running effort to equip IDRA with offsite monitoring tools for solvency and governance, with implementation delayed in part by COVID-19.
The shift to risk-based supervision matters, but its effectiveness depends on legislative backing that remains pending. The government drafted the Insurer Resolution Ordinance 2025, which would allow IDRA to liquidate insurers for specific reasons, seize assets from individuals found responsible for fund misuse, and impose fines of Tk1 crore and up to seven years’ imprisonment on responsible directors and officers. As of the date of publication, the ordinance’s enactment status could not be confirmed. Nivin acknowledged at the briefing that existing law does not permit recovery of penalties from directors’ personal assets – the precise gap the ordinance was drafted to close. Separately, draft amendments to the Insurance Act propose giving IDRA authority to dissolve insurer boards, cap family ownership at 10%, and establish customer protection funds – powers also not yet in force.
The reform agenda also carries an institutional risk that the data does not capture directly. Since IDRA’s establishment in 2011, the authority has had multiple chairmen – M. Shefaque Ahmed (2011-2017, across two terms), Md. Shafiqul Rahman Patwari (2017-2020), Dr. M. Mosharraf Hossain (2020-2022), Mohammad Jainul Bari (2022-2024), and M. Aslam Alam (2024-2026) – none of the latter three completing a full term.
Nivin is the 10th person to hold the position. Whether the current reform cycle produces outcomes that prior ones did not will depend substantially on whether the pending legislative instruments are enacted and whether the regulator can sustain enforcement momentum beyond the announcement stage. The policyholder ID system and credential verification measures Nivin announced are operationally straightforward by comparison. Each valid policy will be assigned a unique number sent directly to the policyholder’s mobile phone. “If a customer does not receive the unique ID, they should not pay the premium,” the chairman said.
