Dhaka: A deep crisis of trust has gripped the country’s life insurance sector due to reluctance by companies to settle claims, misappropriation of funds, and administrative weaknesses. This growing distrust is directly impacting the number of policyholders. Over the past two and a half years, the number of active life insurance policies in Bangladesh has decreased by more than 1 million 26 thousand, a worrying trend for the sector.
A review of the latest quarterly and annual reports from the Insurance Development and Regulatory Authority (IDRA) reveals that from January 2023 to June 2025, the number of life insurance policyholders fell by more than 13%.
According to IDRA data, in January 2023, the number of active life insurance policies in Bangladesh stood at 7,809,121. By the end of 2024, this had dropped to 7,089,777, representing a loss of 719,344 policies in just one year. By June 2025, the number further declined to 6,783,197, with another 325,266 policies lost in that year alone.
In total, over two and a half years, the life insurance sector has lost 1,025,924 policies, marking a 13.14% decrease. The main reasons behind this decline are the delays in claim settlements, fund shortages, and growing mistrust in the industry.
Industry insiders point out that fund shortages have been caused by embezzlement and irregularities within insurance companies. As a result, policyholders often do not receive their claims on time and have to wait for years to receive the money they are owed. Even after their policies expire, customers are left with no guarantee of claim resolution, despite repeatedly visiting insurance company offices.
The number of complaints lodged with IDRA has increased by more than 50% over the past two years, but in many cases, these complaints remain unresolved.
According to the latest quarterly report from IDRA, life insurance claims totalling BDT 3,628 crore remain unpaid across the country.
Investigations by IDRA, the Bangladesh Financial Intelligence Unit (BFIU), and the Anti-Corruption Commission (ACC) have revealed that multiple life insurance companies have misappropriated funds worth billions of taka in recent years.
Notably, three companies—Far East Islamic Life, Sonali Life, and Homeland Life—are reported to have embezzled nearly BDT 3,257 crore. This malpractice has caused significant delays in claim settlements, further eroding trust in both Islamic and conventional life insurance sectors.
Regulatory Weaknesses:
The lack of effective action by the regulatory authority, IDRA, has led to growing frustration among policyholders. According to insurance experts, without strengthening IDRA’s human resources and legal framework, it will be impossible to ensure long-term customer protection in the sector.
Internal analysis within the insurance sector shows that premium income for life insurance companies has remained stagnant over the past two years. Additionally, not only has the issuance of new policies slowed down, but the rate of policy renewals has also decreased.
Experts predict that if this trend continues, the number of active policies could fall below 6.5 million by 2026, signalling a major blow to the sector.
The life insurance industry in Bangladesh is facing a deep crisis of trust due to irregularities in claim settlements, lack of transparency in investments, and weak regulatory oversight. To restore confidence among customers, it is crucial for insurance companies to strengthen their transparency, accountability, and financial restructuring processes. If these issues are not addressed, Bangladesh’s life insurance sector may soon become a symbol of frustration rather than security.