Bangladesh reforms start as $570m in claims remain unpaid

Auditor supervised accounts will hold proceeds from property bonds and other holdings.

Bangladesh's Insurance Development and Regulatory Authority (IDRA) has made the settlement of long-pending insurance claims its top priority as it rolls out reforms aimed at restoring confidence in the country's insurance sector.

Speaking at a media briefing as reported by The Financial Express, IDRA Chairman Mir Nadia Nivin said the regulator's immediate focus is to ensure policyholders receive outstanding claim payments, describing it as the first step towards rebuilding trust in the industry.

The regulator has met with the owners and chief executive officers of the country's seven most financially distressed insurers over the past two weeks to review their assets, investments and financial positions. 

Fresh valuations have been ordered where asset values are in doubt.

Under IDRA's recovery plan, proceeds from the sale of land, government treasury bonds, investments and other assets will be placed in separate bank accounts under auditor supervision. 

Claims will then be paid on a first-in, first-out (FIFO) basis, with the oldest claims settled first.

According to the regulator, the insurance sector has around $570m (Tk70b) in outstanding claims, with nearly $370m (Tk45b) owed by just seven insurers. The initial reform programme will therefore focus on these companies.

To raise funds for claim payments, IDRA plans to use fixed deposits held with financially sound banks, government treasury bonds, marketable land and other investments. 

Deposits held in troubled banks will be addressed in consultation with Bangladesh Bank.

($1.00 = Tk123.10)