The Insurance Development and Regulatory Authority (IDRA) has asked four life insurers to explain in seven working days why they should not be penalised for failing to settle claims amounting to Tk 264.57 crore last year.

Sunflower Life Insurance, Progressive Life Insurance Company, Sunlife Insurance Company and Homeland Life Insurance Company were served the show-cause notices on March 13 based on their unaudited financial reports.

Insurance claims must be settled within 90 days of the policy reaching maturity as per the Insurance Act, 2010.

Sunflower Life did not settle 71 percent of its claims of Tk 132.22 crore, Progressive 61 percent of Tk 166.13 crore, Sunlife 49 percent of Tk 103.61 crore and Homeland 29 percent of Tk 61.46 crore.

The four companies did not respond to phone calls and messages of The Daily Star for comment.

Corruption and irregularities led to an ongoing liquidity crisis, for which the companies were unable to settle the claims, an IDRA official said on condition of anonymity.

There are 35 life insurance and 46 non-life insurance companies in Bangladesh.

The claim settlement rate of the insurance sector in Bangladesh stood at 65.19 percent in 2023 whereas it was 61.16 percent a year earlier, according to the insurance regulator.

However, the global average for claim settlements is 97-98 percent. In India, it stood at 98.45 percent in 2022-23, according to media reports.

According to a 2023 report of the Swiss Re Institute, Bangladesh ranks lowest in insurance penetration in its population among Asia-Pacific countries with a ratio of just 0.50 percent.