Life insurance claims settlement ratio rises to 72% in 2023

The sector saw improvement in claims settlement ratio due to various initiatives undertaken by the Insurance Development and Regulatory Authority (IDRA), said its chairman Mohammad Jainul Bari.

The claims settlement ratio for life insurance companies in the country has reached 72% in 2023, marking a significant 5.03% increase compared to the previous year.

The sector saw improvement in claims settlement ratio due to various initiatives undertaken by the Insurance Development and Regulatory Authority (IDRA), said its chairman Mohammad Jainul Bari at a press conference in Dhaka on Wednesday (28 February) on the occasion of National Insurance Day to be observed on 1 March.

He further announced that Prime Minister Sheikh Hasina will be chief guest at the official programme to be observed to mark the day on 1 March, with Finance Minister Abul Hassan Mahmood Ali in the chair.

Jainul Bari said “Life insurance companies paid Tk8,754 crore out of a total claim amount of Tk12,117 crore in 2023. This translates to a claims settlement ratio of Tk72 for every Tk100 of claims received.”

“To brighten up the image of the insurance sector, the authorities have been directing the insurance companies to give utmost importance to the payment of insurance claims.”

Mohammad Jainul Bari, Chairman, IDRA

The term “claims settlement ratio” refers to the percentage of claims resolved by an insurance provider during a year out of the total claims received. This metric reflects an insurer’s credibility by comparing successful claims resolutions to total customer requests.

In 2023, the claims settlement of the insurance sector rose 4% compared to the previous year, the IDRA chairman said.

He mentioned that 82 authorised insurers are now providing insurance services in the country. Currently 1.71 crore people of the country are covered by insurance. “To brighten up the image of the insurance sector, the authorities have been directing the insurance companies to give utmost importance to the payment of insurance claims,” the IDRA chairman added.

“Corporate Governance Guidelines 2023 and Regulatory Sandbox Guidelines have been issued to modernise the country’s insurance system. Bancassurance has been introduced to market insurance products through banks which will be inaugurated by the PM on Insurance Day. Already five banks have signed an agreement in this regard,” he said.

The IDRA chairman said 19 life insurance companies paid claims around 80–90% while 10 companies paid 70% of claims. “The rest of the companies could not pay claims properly as they were unable to pay. Here, the regulator could not do anything,” he added.

Jainul Bari said IDRA is working with microcredit authorities so that more people are included in the insurance sector. “Besides, numerous tools are pending like solvency margin regulation and risk-based supervision. If it is possible to run these tools, it will play a vital role in building confidence in the insurance sector.”

Industry insiders say a few years ago, the companies used to spend excessively to increase business procurement.

“For instance, to bring fresh Tk100, we used to spend Tk120. This is why it was difficult for life insurance companies to build adequate life funds to meet the claims of policyholders back then,” a senior official told TBS.

 

Source: The Business Standard

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Iram Hoque

Mohd. Iramul Hoque (Iram) completed his bachelor’s degree in Industrial Engineering in 2018 from Purdue University.

He joined Deloitte Consulting LLP as a Consulting Analyst based out of New York City having previously worked in similar roles at PricewaterhouseCoopers LLP & Landis+Gyr.

Iram left consulting and returned to Bangladesh to take up the family business. Realizing the opportunity in the capital market in Bangladesh, Iram worked relentlessly to found Columbia Shares & Securities Ltd in 2021.

Md Saiful Hoque

Md. Saiful Hoque received his bachelor’s degree in Civil Engineering from Columbia University in 1986 followed by a master’s degree from Texas A&M University in 1988. Upon completion of his Graduate Degree, he joined Gulf Interstate Engineering Company in Houston, USA serving as a Project Engineer.

He returned to Bangladesh in 1992 to join Columbia Enterprise Ltd., the family business of Shipping and Freight Forwarding services. In addition, he has built flourishing businesses manufacturing Garment’s Accessories and Fast-Moving Consumer Goods.