The insurance sector of Bangladesh is currently undergoing significant policy and structural pressure under the International Monetary Fund (IMF)-supported reform agenda linked to the country’s ongoing loan programmes. Alongside the banking sector, the insurance industry has been identified as requiring major improvements in governance, transparency, customer service, claims settlement efficiency, and investment practices.
Under the Extended Credit Facility (ECF), Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) arrangements, financial sector reform has become a central component of macroeconomic policy discussions. According to the International Monetary Fund, a mission visited Bangladesh between 29 October and 13 November 2025 to conduct the fifth review of the programme and Article IV consultations. Earlier, in June 2025, IMF assistance was projected at approximately USD 4.1 billion under ECF/EFF and around USD 1.4 billion under RSF.
A core concern is the limited contribution of the insurance sector to the national economy. Insurance penetration remains extremely low, estimated between 0.33% and 0.4% of GDP. Total insurance premium income in FY2024–25 stood at BDT 18,534 crore, with life insurance contributing BDT 12,042 crore and non-life insurance BDT 6,492 crore. The life fund reached approximately BDT 34,650 crore.
Insurance sector indicators
| Indicator (FY2024–25) | Value |
|---|---|
| Total premium income | BDT 18,534 crore |
| Life insurance premium | BDT 12,042 crore |
| Non-life insurance premium | BDT 6,492 crore |
| Life fund size | BDT 34,650 crore |
| Insurance penetration | 0.33%–0.4% of GDP |
| Claims settlement rate | ~57% |
Claims settlement performance remains a critical weakness. In 2024, claims worth BDT 16,484 crore were submitted, of which BDT 9,476 crore were paid, reflecting a settlement rate of around 57%. Life insurance claim settlement has declined from 72% to 65%, while non-life insurance has fallen from 41% to 32%. By global standards, where settlement rates typically range between 97% and 98%, Bangladesh’s performance is significantly lower.
The sector also faces declining trust and rising policy lapses. In late 2025, lapse rates increased by around 4%, reflecting difficulties in premium payments amid inflation and weakening consumer confidence. A previous development project of BDT 925 crore, launched in 2018 to expand coverage, did not achieve its targets. Insurance coverage declined from around 13.6 million policyholders to 8.22 million by 2024, while penetration fell from 0.55% to 0.36%.
Regional comparison of insurance penetration
| Country/Region | Insurance penetration |
|---|---|
| Bangladesh | 0.33%–0.4% |
| Vietnam | 2.3%–2.8% |
| India | 3.7% |
| OECD average | 6.2% |
| Luxembourg | ~33% |
IMF-supported reform discussions have highlighted several priority areas. These include strengthening the Insurance Development and Regulatory Authority through amendments to existing laws, improving capital adequacy and solvency margins, modernising investment guidelines, and enhancing digital claims processing systems. There is also emphasis on expanding agricultural and health insurance products, as well as reforming reinsurance arrangements to improve risk absorption capacity.
Despite structural weaknesses, policy discussions suggest that effective implementation of IMF-aligned reforms could improve governance, financial stability, and long-term sector performance.