Brokers and intermediaries placing life insurance business in Bangladesh now face cooling-off periods of up to six months on new policy sales if their carrier settles claims late, after the country’s regulator banned insurers from tying payouts to the purchase of new policies.
The Insurance Development and Regulatory Authority (IDRA) in Bangladesh issued the directive on October 15, 2026, creating a direct link between a carrier’s claims settlement speed and how quickly new business can be written with the same customer.
The stakes are uneven across the market. Among the seven distressed insurers identified by IDRA, settlement rates are as low as 1.6% at Baira Life Insurance, according to IDRA data reported by The Daily Star in March 2026. At the other end, MetLife Bangladesh settled 98.3% of claims in the October-to-December 2025 quarter, according to IDRA data reported by The Business Standard in April 2026. That gap means the cooling-off periods will constrain some distribution channels far more than others, a development that comes as the regulator has already reshaped distribution by scrapping agent commissions in the non-life sector from January 2026.
Under the rules, insurers that settle maturity claims within the statutory 90-day period face no restrictions on new business.
An insurer that settles after 90 days but within the following 30 days cannot issue another policy to that customer for 30 days from the payment date. If settlement takes 120 days or longer, the restriction extends to 180 days.
For context, the overall life insurance claims settlement rate in Bangladesh fell from 85% in 2020 to 66% in 2025, according to IDRA data reported by The Daily Star. Among the seven distressed insurers identified by IDRA, rates are far lower: Baira Life Insurance settled roughly 1.6% of claims, Padma Islami Life Insurance about 4%, and Fareast Islami Life Insurance about 6%.
By contrast, MetLife Bangladesh settled 98.3% and Guardian Life Insurance 97.5% in the October-to-December 2025 quarter, according to IDRA data reported by The Business Standard.
Brokers placing business with carriers in the lower tier face the prospect of 180-day cooling-off periods becoming routine rather than exceptional.
Read more: Bangladesh insurance sector faces reckoning over unpaid policyholder claims
IDRA found that some life insurers had been withholding maturity benefits, death claims, and survival benefits unless customers agreed to buy a new policy. In some cases, companies deducted premiums for new policies directly from outstanding claim amounts and paid only the remaining balance.
IDRA said the practice was “creating dissatisfaction among policyholders,” according to The Daily Star.
The circular requires insurers to transfer the entire claim amount in a single payment to the policyholder’s or nominee’s bank account. No deductions are permitted except applicable government revenue charges. The directive, signed by IDRA director Rakibur Rahman Khan, took immediate effect.
The cooling-off restrictions add to a series of regulatory changes reshaping how insurance is distributed in Bangladesh.
IDRA scrapped individual agent commissions in the non-life sector from January 1, 2026, a move that left the market without a formal brokerage system to fill the gap. Sultan-ul-Abedin Mollah, a former IDRA member, told The Business Standard that “removing agent commissions without first introducing a brokerage system could create practical difficulties.”
Adeeba Rahman, first vice-president of the Bangladesh Insurance Association, told The Daily Star that “many companies operate with almost depleted funds,” raising questions about whether some carriers can settle within 90 days even if they intend to.
For intermediaries navigating both the commission changes and the new cooling-off rules, carrier selection is becoming a more consequential decision. Companies that settle within 90 days will operate without restrictions, making claims performance a factor in which insurers brokers choose to work with. The regulator’s direct intervention in distributing claim cheques to policyholders earlier this year underscored how far the market has drifted from standard claims practice.
Read more: Bangladesh regulator distributes cheques as claims culture collapses
As of 2025, roughly 1.2 million policyholders were waiting on unpaid life insurance claims worth Tk4,403 crore, according to IDRA data reported by The Daily Star.
IDRA chairman Mir Nadia Nivin told The Daily Star in September 2026: “If you sell a policy knowing that you will not be able to pay the claim, that can amount to fraud.”
Bangladesh is not alone in tightening claims rules. In August 2026, Pakistan’s Securities and Exchange Commission proposed draft Insurance Market Conduct Rules that would impose settlement deadlines of 20 days for life claims and five days for motor claims, as reported by ProPakistani. Violations would carry fines of up to PKR 1 million.
Ala Ahmad, CEO of MetLife Bangladesh, told The Daily Star in August 2026 that insurers must honour their promises through swift claims settlement as public trust in the sector grows. That pressure on claims performance is mirrored across the broader Asia-Pacific market, where intermediaries are increasingly weighing settlement track records alongside pricing.
