Six life insurers’ claim settlement below 50% in 2022

Although the overall claims settlement ratio in 2022 increased by 9.13% year-on-year, six life insurers however failed to settle even 50% of their total claims of policyholders, according to data from the Insurance Development and Regulatory Authority (Idra).

In 2022, the total claims settlement ratio of life insurers stood at 66.97%, which was 57.84% in 2021.

Of the six life insurers, Swadesh Islami Life Insurance has the highest claim settlement ratio of 48.15%, which is Tk1.3 crore against a total claim of Tk2.71 crore in 2022.

Golden Life Insurance settled Tk15.89 crore or 37.76% of the total claim of Tk42.07 crore, Sunflower Life Insurance settled Tk34.77 crore or 24.60% of the total claim of Tk141.34 crore, and BAIRA Life Insurance settled Tk1.04 crore or 1.83% of the total claim of Tk56.9 crore in 2022.

Progressive Life Insurance Company settled Tk64.97 crore or 39.11% of the total claim of Tk166.13 crore.

In July this year, the Bangladesh Securities and Exchange Commission (BSEC) downgraded the company to the "Z" category of the stock exchanges from the "A" category, because of its failure to hold annual general meetings (AGMs) and declare dividends for two consecutive years.

Also, the commission nominated five independent directors for the company's board.

Fareast Islami Life Insurance's total claims stood at Tk4,559.38 crore in 2022. Of the amount, the insurer managed to settle only Tk970.59 crore, which was 21.29% of its total claims.

Earlier, the BSEC, through a special audit after receiving allegations that the company failed to meet customers' claims, found that Fareast's former chairman and directors embezzled Tk2,100 crore between 2010 and 2020.

BSEC also restructured Fareast's board and nominated ten independent directors.

When the reporter visited the company officials in person, they declined to comment on how the company would settle the claims.

SM Ibrahim Hossain, director of the Bangladesh Insurance Academy, told The Business Standard, "A few years ago, companies such as the ones struggling to settle claims used to spend excessively to increase business procurement. For instance, to bring fresh Tk100, they used to spend Tk120."

This is why it was difficult for life insurance companies to build adequate life funds to meet claims of policyholders back then, he said, adding that the regulator is now taking measures to control insurers' cost management. 

Md Jahangir Alam, spokesperson of the Idra, said the insurance regulator's present board has emphasised the importance of life insurance companies honouring their mature policies for the benefit of the general public involved in this sector.

Idra's approach to resolving issues on a case-by-case basis yielded positive outcomes in the life insurance domain, he added.

In terms of the general insurance sector's key indicators, the review year displayed a mixed performance.

While the management expense ratio improved, the claims settlement ratio, return on investment, risk retention rate, and investment to total assets ratio deteriorated compared to the previous year.

In 2022, the return on investment decreased in both life and non-life insurance sectors.

During the year, the return on investment in the non-life insurance sector stood at 5.65%, which was 7.66% in the previous year.

The life insurance sector's return on investment stood at 7.39% in 2022, down from 7.56% in 2021.

According to Idra, the gross premium amount at the end of 2022 stood at Tk16,815 crore. The gross premium for life insurance was Tk11,400 crore, while the gross premium for non-life insurance was Tk5,415 crore.

In 2022, VAT and taxes of Tk1,305.73 crore on premiums earned by life and non-life insurance companies will have been deposited in the government's exchequer.

The total number of insurance claims in 2022 was 30,62,468. Among them, 19,12,869 claims were settled, of which, 18,92,992 were life insurance and 19,877 were non-life. In addition, the total amount of unpaid claims was Tk6,559.81 crore.