Omar Faruk

Settlement of long-pending insurance claims is one of the top priorities of the Insurance Development and Regulatory Authority (IDRA) in attempts to restore public trust in the insurance sector, says the newly appointed chief.

The regulator has moved to liquidate assets of financially distressed insurers to repay policyholders' claims. It is simultaneously striving to stop illegal commission practices, introduce risk-based supervision and enforce mandatory unique policyholder IDs.

Speaking at a view exchange meeting with journalists on Thursday, IDRA chief Mir Nadia Nivin said trust in the insurance sector would gradually return once policyholders began receiving their long-overdue claim payments.

Ms Nivin, who joined IDRA as chairman last month, said a handful of insurers were undermining the credibility of the entire insurance sector. Their failure to settle policyholders' claims on time eroded public trust across the industry.

According to the chairman, the insurance sector (both general and life insurance) currently has around Tk 70 billion in outstanding claims, of which nearly Tk 45 billion is concentrated in just seven life insurers.

The seven insurers are 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, sources said.

The IDRA chairman said the regulator had already held separate meetings over the past two weeks with the owners and chief executive officers of these financially distressed insurance companies. The regulator reviewed their assets, investments and financial positions, while ordering fresh valuations where asset values appeared questionable.

"The first priority is to start settling pending claims as quickly as possible. Once policyholders begin receiving their dues, confidence in the sector will gradually return, making it easier to stabilise the industry," she said.

IDRA has identified four major sources for recovering funds to settle claims: fixed deposits with financially sound banks, government treasury bonds, marketable land and other investments. Deposits stuck in troubled banks will be addressed in consultation with Bangladesh Bank, she said.

Under the recovery plan, proceeds from the sale of land, government treasury bonds, investments and other assets will be deposited into separate bank accounts for each company under auditor supervision.

Claims will then be settled on a first-in, first-out (FIFO) basis, ensuring that the oldest claims are paid first, said the IDRA chief.