Bangladesh’s Non-Life Insurance Sector in Crisis: 92% of Claims Remain Unsettled

Bangladesh’s Non-Life Insurance Sector in Crisis: 92% of Claims Remain Unsettled

Mounting Unsettled Claims Highlight a Deep Structural Crisis

Bangladesh’s non-life insurance sector is facing one of its toughest periods in recent history, as an alarming majority of customer claims remain unresolved. According to the latest quarterly report released by the Insurance Development and Regulatory Authority (IDRA), a staggering 92% of claims submitted by policyholders are still unsettled. The data, compiled from 46 non-life insurance companies, paints a grim picture of inefficiency, poor management, and a lack of accountability within the sector.

The report shows that non-life insurance companies collectively received claims worth more than Tk 3,600 crore during the second quarter of 2025. However, only a fraction of these claims—around Tk 300 crore—were actually settled. The rest remain pending, creating a massive financial and reputational burden for the industry. This continuous backlog not only reflects operational weaknesses but also raises questions about the sector’s ability to deliver on its promises to policyholders.

Growing Backlog and Declining Public Confidence

Industry observers note that this situation is not a sudden crisis but the result of years of weak governance and delayed policy reforms. Even at the beginning of the year, the non-life insurance sector was burdened with thousands of unsettled claims carried forward from the previous fiscal period. Despite receiving new premium inflows and regulatory directives to speed up claim processing, the backlog has continued to grow.

Such inefficiencies have far-reaching implications. For many policyholders—especially small business owners who rely on insurance to mitigate losses from accidents, fires, or natural disasters—delayed settlements can mean financial devastation. When an insurance claim is not paid in a timely manner, it directly impacts the individual’s or business’s ability to recover from loss, leading to frustration and declining trust in the system.

State-Owned and Private Insurers Both Struggling

The problem is widespread across both public and private non-life insurance companies. Among all entities, the state-owned Sadharan Bima Corporation (SBC) stands out as having the highest number of unsettled claims. According to IDRA’s data, SBC has more than Tk 2,000 crore in pending claims, representing over 96% of the total claims filed against it. The situation underscores the challenges faced by public institutions where bureaucratic delays and limited technological adoption slow down claim processing.

In the private sector, several prominent companies are also struggling to maintain efficiency. Green Delta Insurance, Pragati Insurance, and Reliance Insurance have each reported significant backlogs, with unsettled claim ratios exceeding 90%. These companies, despite having modern management structures and strong market reputations, have been unable to overcome systemic bottlenecks such as inadequate documentation, lack of automation, and slow coordination between surveyors and regulators.

Why Are Claims Remaining Unsettled?

Experts and analysts point to a combination of factors behind the persistently high volume of unsettled claims. One major issue is the lack of digital infrastructure in claim verification and approval processes. Many insurance companies still rely on manual claim assessment systems, which are not only time-consuming but also prone to errors and corruption.

Another major concern is the liquidity crisis faced by insurers. Due to poor investment returns and delayed premium recoveries, many companies struggle to maintain adequate claim reserves. This financial weakness often forces insurers to postpone payments even when claims have been approved.

Additionally, weak regulatory enforcement has allowed insurers to operate with minimal accountability. Although IDRA has introduced several initiatives to improve claim transparency and data reporting, progress has been slow. In many cases, insurance companies do not face meaningful penalties for failing to settle claims on time.

Some Companies Show Limited Progress

While the overall picture remains bleak, a few insurers have made modest progress in clearing their backlogs. Sadharan Bima Corporation, despite its massive volume of claims, settled the highest total value of claims in the quarter, followed by Pioneer Insurance, Union Insurance, Green Delta Insurance, and Bangladesh General Insurance. These companies managed to disburse several crore taka in claim payments, though the amounts remain small compared to the total pending liabilities.

However, experts warn that these efforts are not enough to rebuild public trust. Customers now demand faster, more transparent, and technology-driven claim handling processes. Without visible improvements, both corporate and individual clients may turn away from local insurers, seeking alternative risk coverage options.

Regulatory Reforms and Future Outlook

In response to the worsening situation, the IDRA has signaled plans to introduce stricter enforcement measures for claim settlements. Officials have hinted that companies repeatedly failing to settle legitimate claims within a specific time frame could face financial penalties, operational restrictions, or even license suspensions.

There are also discussions about implementing a centralized digital claim tracking system, which would allow policyholders to monitor their claim status in real-time. Such a system could help reduce corruption, enhance transparency, and restore faith in the insurance process.

Industry insiders argue that to achieve long-term stability, Bangladesh’s insurance sector must embrace digital transformation, strengthen risk-based capital requirements, and improve governance standards. Regular audits, transparent reporting, and stronger oversight could help close the gap between customer expectations and company performance.

Conclusion: A Sector in Need of Urgent Overhaul

The revelation that nearly 92% of non-life insurance claims remain unsettled is not just a statistical concern—it reflects a deep structural failure within Bangladesh’s financial ecosystem. For an industry meant to provide security and peace of mind, such inefficiency represents a serious breach of trust.

If these challenges are not addressed immediately, the country’s non-life insurance sector risks losing credibility, investors, and customers alike. To rebuild confidence, both the IDRA and insurance companies must prioritize efficient claim settlement, transparent reporting, and strong customer communication. Only through accountability, modernization, and reform can the non-life insurance industry hope to fulfill its core purpose—protecting people and businesses when they need it most.