In a decisive move to sanitise the domestic insurance landscape, the Bangladesh Insurance Association (BIA) has issued a directive requiring all branch managers of non-life insurance firms to sign a formal undertaking. This mandate aims to rigorously enforce the “Zero-Commission Policy,” effectively eliminating the entrenched practice of paying unauthorised incentives to secure business.
The directive, communicated via a letter signed by BIA Secretary Md. Omar Faruque on Monday, 23 February, follows the regulatory framework established by the Insurance Development and Regulatory Authority (IDRA). This strategic shift is designed to enhance transparency and ensure the long-term solvency of the non-life insurance sector.
The End of the Agency System
As of 1 January 2026, the IDRA has suspended all insurance agent licences within the non-life sector. This sweeping reform means that no valid agent licences currently exist, thereby removing any legal grounds for the payment of commissions. The BIA’s recent instruction acts as a secondary layer of enforcement, holding branch managers personally accountable for maintaining this “zero-commission” environment.
Key Requirements of the Affidavit
Under the new mandate, Chief Executive Officers (CEOs) of all non-life insurers must collect signed pledges from their respective branch managers and notify the BIA upon completion. The affidavit binds managers to several critical ethical and legal standards:
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Strict Compliance: Adherence to company policies, the Insurance Act, and all directives issued by the regulatory body.
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Abolition of Incentives: A total prohibition on receiving or providing any direct or indirect commissions, financial benefits, or hidden incentives.
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Premium Integrity: Ensuring that all premiums collected are deposited directly and in full into the company’s official accounts via prescribed channels.
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Accountability: Acceptance of severe disciplinary action from both the company and the IDRA in the event of a breach of these regulations.
Regulatory Transformation at a Glance
| Feature | New Regulatory Status |
| Agent Licences | Suspended (Effective 1 Jan 2026) |
| Commission Rate | 0% (Strictly Enforced) |
| Managerial Accountability | Personal Affidavit Required |
| Primary Goal | Eradication of illegal financial incentives |
| Oversight Body | IDRA & Bangladesh Insurance Association (BIA) |
Impact on the Sector
The move is expected to curb the “commission war” that has historically plagued the industry, where companies often undercut each other by offering high illegal commissions to middlemen. By enforcing a zero-commission policy, the BIA hopes to redirect those funds towards better claim settlement ratios and improved service delivery for policyholders.
Industry experts suggest that while this transition may be challenging for managers accustomed to the old system, it is an essential step towards bringing the Bangladeshi insurance market in line with international best practices.