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Country’s 80 insurance companies have been subjecting policyholders to various excuses for an extended period – thereby refusing to fulfill their legitimate claims.
Within this group, the customers of the companies, known as policyholders, owe a total of 276 crore 25 lakh 95 thousand 103 taka to two government insurance companies, whereas the remaining 78 non-government insurance companies have outstanding claims amounting to 4,146 crore 32 lakh 35 thousand 336 taka.
A special report by the regulatory body Insurance Development and Regulatory Authority (IDRA) has brought the revealing information to the fore. Sources concerned have confirmed that the report has already been sent to the Finance Department of the Ministry of Finance.
IDRA, too, has been aware of these companies and asked those companies in question to pay the insurance money quickly.
Fareast Islami Life, Padma Islami Life, Baira Life, Sunlife Insurance, Homeland Life Insurance Company, Prime Islami Life, and Sunflower Insurance have emerged at the forefront of insurance companies facing allegations of non-payment of insurance claims. Legal actions, including filing cases against the owners and officials in the management departments of these companies, have been initiated due to their failure to fulfill their payment obligations.
Bangladesh Insurance Association (BIA), association of insurance company MDs, Bangladesh Insurance Forum (BIF), insurance company officials and Insurance Development and Regulatory Authority (IDRA) have acknowledged the non-payment of insurance claims on time.
According to the report from IDRA, as of September 30 of the current year, customers collectively had dues with insurance companies totaling 6 thousand 809 crore 21 lakh 23 thousand 777 taka. In response, insurance companies have disbursed claims amounting to Tk 2,386,62,93,338 to customers.
Therefore, the outstanding insurance claims for customers remain at 4 thousand 422 crore 58 lakh 30 thousand 439 taka. Among these, 78 companies, including Fareast Islami Life, Baira Life, Sunflower, and Sunlife, collectively owe 4 thousand 146 crore 32 lakh 35 thousand 336 taka to insurance customers. Of this total, Life Companies are accountable for 2 thousand 956 crore 63 lakh 72 thousand 743 taka, while non-life companies are responsible for 1 thousand 189 crore 98 lakh 62 thousand 594 taka owed to customers.
Among the two government institutions, Jiban Bima Corporation has an outstanding amount of Tk 41 crore 31 lakh 96 thousand 471 owed to customers, while Sadharan Bima Corporation owes Tk 234 crore 93 lakhs 98 thousand 632.
In response to this situation, Nasir Uddin Pavel, the First Vice-President of BIA, remarked that the entire insurance sector is receiving a tarnished reputation due to the actions of some non-compliant companies. He encourages those companies that are currently not fulfilling their obligations to customers to prioritise and settle outstanding insurance claims.
BM Yusuf Ali, the President of Bangladesh Insurance Forum, an organisation representing influential individuals and executives of insurance companies, expressed concern over the lack of confidence among the general public in the country's insurance sector. He attributed this skepticism to the prevailing issue of many companies failing to fulfill their financial obligations to customers.
Ala Ahmad, the Chief Executive Officer (CEO) of Metlife Bangladesh, the largest company in the life insurance sector, believes that improving the experience of receiving insurance payouts will enhance people's interest and confidence in insurance. He emphasised that timely payment of insurance claims or dues is the rightful expectation of customers, as insurance serves the purpose of meeting future needs or addressing unexpected events.
Industry insiders have noted that the declining confidence of the general public in the insurance sector is attributed to delayed and often problematic insurance payouts. This lack of trust is contributing to a slowdown in the insurance industry. Observers have pointed out that insurance companies tend to swiftly settle claims for influential individuals, such as Members of Parliament or ministers, while individuals without influence, such as widows, rickshaw pullers, or daily wage laborers, face prolonged harassment in processing their claims. This disparity in treatment is seen as a significant issue within the industry.
Customers are reported to face various forms of harassment when seeking insurance claims or dealing with policies after their expiration. The first type involves complications with mature receipts. Additionally, customers encounter challenges after completing application forms and submitting final receipts at the company's branch office. The process involves navigating through various levels of bureaucracy, from branch offices to district offices, district offices to zonal offices, and so forth, creating a cumbersome and time-consuming experience for the policyholders.
Thirdly, after the lobbying process, some companies release payments to customers upon maturity, but with the condition of purchasing a new policy within the same company. A portion, up to 50 percent, is retained by the company under the guise of this new policy.
Fourthly, despite receiving cheques after extensive delays, customers may find discrepancies when attempting to deposit them at the bank. In some instances, the cheques are dishonored due to insufficient funds.
Fifthly, while customers are provided with cheques, they are informed that the funds can only be withdrawn after a delay of six months, nine months, or even a year.
SM Nuruzzaman, the CEO of Zenith Islami Life Insurance, expresses the belief that 99 percent of the insurance claims are still pending. He emphasises that it is in the company's best interest to fulfill insurance claims, even if it requires selling assets when financial resources are insufficient. This approach is seen as essential for maintaining the company's credibility and meeting its obligations to policyholders.
Jahangir Alam, the Director (Deputy Secretary) and Spokesperson of IDRA, commented on the situation, stating that insurance companies seem reluctant to settle claims when policies expire. Such companies, failing to fulfill insurance claims, are facing negative branding.
To restore confidence in the insurance sector, the MD-Chairman and the Board of Directors of these companies have been summoned and urged to expedite the payment of insurance claims. In cases where companies do not comply with these directives, the board is being reconstituted as a measure to ensure adherence to IDRA's instructions.