Insurance Compensation Delays Deepen Hardship for Businesses and Individuals

Despite insurance being designed as a financial safety net during accidents, fires, or business disruptions, thousands of policyholders across Bangladesh are facing prolonged uncertainty as claim settlements remain severely delayed. Latest figures reveal a deepening crisis in the general insurance sector, with billions of taka in legitimate claims still unpaid, eroding public trust and undermining the sector’s credibility.

According to unaudited data from the Insurance Development and Regulatory Authority (IDRA), general insurance companies settled only 7.55 per cent of total claims during the July–September 2025 quarter. This represents a notable decline from the 8.32 per cent settlement rate recorded in the previous April–June quarter—an alarming drop of more than nine per cent in just three months. The data points to serious weaknesses in insurers’ liquidity management, financial strength, and operational efficiency.

During the July–September quarter, total claims lodged with general insurance companies amounted to approximately Tk3,637 crore. Of this, only Tk275 crore was settled, leaving a staggering Tk3,363 crore pending by the end of the quarter. Many of these claims relate to incidents that occurred years ago, with policyholders still waiting for compensation long after their policies expired. This prolonged delay has caused acute financial distress and psychological strain, particularly for small businesses and individuals dependent on timely payouts to recover from losses.

The situation appears most severe at the state-owned General Insurance Corporation, which settled just 3.37 per cent of claims during the quarter. As a result, unsettled claims at the corporation stood at Tk2,142.37 crore. A senior official, speaking on condition of anonymity, said that while efforts are being made to clear the backlog, nearly 80 per cent of delays stem from the late submission of survey reports, which are mandatory for assessing losses.

The problem is particularly pronounced in reinsurance-related cases. In some instances, survey reports take five to seven years to be completed, preventing final settlement and delaying payments from foreign reinsurers. This, in turn, postpones payments to primary policyholders, worsening their hardship.

Private insurers are also struggling. Green Delta Insurance settled only 8.26 per cent of claims during the quarter, leaving Tk266.54 crore unpaid. Company officials cited incomplete or legally invalid documentation submitted by policyholders as a major cause of delays. Missing police reports, fire service certificates, invoices, ownership documents, or survey reports often complicate verification and extend settlement timelines by months.

Disputes over assessed claim amounts, arbitration proceedings, and court cases further prolong settlements. Additionally, many claims relate to uninsured perils—such as political violence or excluded natural disasters—necessitating lengthy explanations and legal reviews.

Other insurers with significant pending claims include Pragati Insurance (Tk157.91 crore), Reliance Insurance (Tk98.91 crore), and Peoples Insurance Company (Tk80.80 crore). Industry insiders say the crisis intensified in the second half of 2024 amid economic pressures, but experts argue that weak regulatory enforcement has also played a critical role. Although the law requires claims to be settled within 90 days, this provision is rarely enforced.

Experts also point to delays by the state-owned Sadharan Bima Corporation (SBC), which by law reinsures 50 per cent of all non-life insurance. Delays in SBC’s settlements often prevent primary insurers from paying policyholders on time.

Industry leaders stress that restoring confidence will require coordinated action by insurers, reinsurers, regulators, and policyholders alike. Without systemic reform, delays are likely to persist, deepening public distrust in the insurance system.

Snapshot of Claim Settlement Situation (July–September 2025)

The growing pile-up of unpaid claims serves as a stark warning: unless accountability improves and settlement processes are modernised, the insurance sector’s promise of protection will remain unfulfilled for millions of policyholders.