Insurers that are struggling to settle claims
A number of life insurance companies in Bangladesh struggled to settle claims in 2022 due to a lack of liquidity resulting from bad investments and fund embezzlement by their chairmen and directors.
Of the 35 life insurers operating in the country, the claim settlement rate of five firms remains below 40 percent, according to data of the Insurance Development and Regulatory Authority.
Baira Life Insurance is in the worst position, having paid out just 1.83 percent, or Tk 1 crore, of its clients' claims amounting to Tk 56.9 crore in 2022.
Similarly, the settlement rate of Fareast Islami Life Insurance stood at 21.2 percent last year, with the company having paid out Tk 970 crore against claims of Tk 4,559 crore.
Meanwhile, the claim settlement rate of Sunflower Life Insurance and Golden Life Insurance was 24.6 percent and 37.7 percent respectively.
Likewise, Progressive Life Insurance settled 39 percent of its claims in 2022.
On condition of anonymity, a top official of a leading life insurance company said some life insurers are struggling to settle claims as they made a number of bad investments, where the return was insignificant.
Also, some of the firms are facing a liquidity crunch as their life fund has been embezzled, he added.
With this backdrop, the IDRA appointed observers in four life insurance companies last June.
The companies are Progressive Life Insurance Company Limited, Sunlife Insurance Company Limited, Padma Islami Life Insurance Limited, and Golden Life Insurance Limited.
In 2021, the Bangladesh Securities and Exchange Commission reconstructed the board of Fareast Islami Life Insurance to protect investors' funds after finding that the company's directors had embezzled funds.
The regulator found through an audit that Fareast's former chairman and directors committed serial financial crimes and siphoned off policyholders' funds worth more than Tk 2,100 crore between 2010 and 2020.
Sheikh Kabir Hossain, chairman of the reconstructed board of Fareast Islami Life Insurance, told the Daily Star last month that the company is "sick" as it owes a lot of money while its owners are in jail.
The government had set up a new board of directors to restore Fareast Islami to its previous position, but they have not made much progress so far.
"And due to this sickness, it is not possible to pay back debts at the required rate," Hossain added.
Top officials of the Baira, Sunflower, and Golden life insurance companies could not be reached for a comment by the time this report was filed.
Comments