Bangladesh’s insurance regulator has barred life insurers from forcing policyholders to buy new policies before receiving their claims, tightening rules after finding that some companies were withholding payouts or deducting fresh premiums from money owed to customers.
The Insurance Development and Regulatory Authority (IDRA) issued the directive on 15 October, requiring insurers to pay claims in full within the statutory 90-day period and imposing restrictions on issuing new policies to customers whose maturity claims are settled late.
Under the new rules, an insurer that settles a maturity claim after 90 days but within the following 30 days cannot issue another policy to the same customer for 30 days from the payment date.
If settlement takes 120 days or longer, the restriction extends to 180 days after payment.
Insurers that settle maturity claims in full within the prescribed 90 days face no such restriction.
The measures follow the regulator’s finding that some life insurers were making the purchase of a new policy a condition for paying maturity benefits, death claims or survival benefits.
In some cases, companies deducted premiums for new policies directly from outstanding claims and paid customers or nominees only the remaining balance.
IDRA said such practices violate existing insurance laws, undermine policyholders’ interests and damage confidence in the industry.
The circular also requires insurers to transfer the entire claim amount in a single payment to the bank account of the policyholder or nominee.
No deductions or fees are permitted except applicable government revenue charges.
While the 30-day and 180-day restrictions on issuing fresh policies apply specifically to delayed maturity claims, the requirement to pay claims in full without unauthorised deductions covers maturity claims, death claims and survival benefits.
The directive, signed by IDRA Director Rakibur Rahman Khan, took immediate effect.
