Claims unpaid, confidence shattered: Delays by large insurers erode public trust
Analysts say backlog highlights limited financial capacity, poor liquidity management, operational inefficiencies
Persistent delays in claim settlements by major general insurers are eroding public confidence in Bangladesh's insurance sector, as official data show insurers paid just 9.37% of total claims in the final quarter of 2025.
Data from the Insurance Development and Regulatory Authority (IDRA) show general insurers settled only Tk372 crore out of claims worth Tk3,971 crore filed between October and December 2025.
Industry analysts said the massive backlog highlights deep structural weaknesses, including limited financial capacity, poor liquidity management and operational inefficiencies.
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Sadharan Bima settles just 3.41%
Among the largest insurers, the state-owned Sadharan Bima Corporation recorded the highest volume of pending claims. During the quarter, it faced claims totalling Tk2,264 crore but settled only Tk77 crore, representing just 3.41% of the total. As a result, Tk2,187 crore remained unsettled.
A senior official of the corporation, speaking on condition of anonymity, said the organisation is trying to resolve claims but faces structural obstacles that slow the process.
He said roughly 80% of delays occur because survey reports – crucial documents used to assess damage after accidents or disasters – are often submitted late.
The problem is particularly severe for reinsurance-related claims. In some cases, survey reports take five to seven years to arrive, making it impossible to complete final settlements, he said.
"Without these reports, the corporation cannot settle claims with foreign reinsurers, which in turn delays compensation for policyholders," the official added.
He warned that unless the survey system becomes faster and more efficient, the settlement crisis will persist across the general insurance industry.
Private insurers also lag
During the October-December quarter, Green Delta Insurance settled only Tk13 crore out of Tk342 crore in claims, leaving around Tk330 crore unresolved. Its settlement rate stood at just 3.67%.
Despite the low settlement ratio, the company declared a 27% cash dividend for shareholders in 2025, drawing criticism from policyholders who said firms prioritise shareholder returns over client payments.
Reliance Insurance faced similar criticism. It settled Tk20.41 crore out of Tk161 crore in claims during the quarter, leaving Tk141 crore pending, yet approved a 30% cash dividend.
Other insurers also showed weak performance. Pragati Insurance had Tk200 crore in claims but resolved only Tk17 crore, while Peoples Insurance settled just Tk0.52 crore out of Tk89 crore. Northern Islami Insurance paid Tk1.7 crore against claims worth Tk70.92 crore.
A senior official of Green Delta told TBS that delays often occur because policyholders fail to submit complete documentation. Many file claims on time but do not provide proof of loss, police or fire service reports, survey assessments, ownership papers or invoices.
Incomplete or incorrect paperwork complicates verification and can delay settlements for months, he said, adding that disputes over claim amounts are another factor.
"When policyholders demand compensation exceeding the insurer's assessed loss, disagreements often lead to arbitration or legal proceedings, prolonging the process," he added.
Claims involving uninsured risks also create complications, he said. In some cases, policyholders file for losses not covered under policies, including damages from political unrest, certain natural disasters or gradual asset deterioration.
"Such cases require reassessment and explanation, which extends settlement timelines," he explained.
Weak enforcement, lack of accountability
Experts said documentation issues alone cannot explain the scale of the problem. They argued that weak regulatory enforcement and a lack of accountability allow insurers to delay payments with little consequence.
The IDRA has faced criticism from industry observers and consumer groups for failing to take strong action against companies that consistently postpone settlements.
The delays are particularly damaging in the non-life sector, where timely compensation is critical for businesses and individuals recovering from accidents, fires or natural disasters. When claims remain unpaid for months or years, policyholders are often forced to absorb losses, causing severe financial stress.
By law, insurers must settle valid claims within 90 days. In practice, industry sources said this rule is frequently ignored.
Role of reinsurance provider
Another structural factor behind the delays is the role of the state-owned reinsurer, Sadharan Bima Corporation. Under current rules, general insurers must reinsure 50% of their risk exposure with the corporation, while the remainder can be transferred to foreign reinsurers.
Industry insiders said delays by the state reinsurer in settling its share often prevent primary insurers from paying policyholders on time, trapping the process in a complex chain involving surveyors, insurers, reinsurers and regulators.
