Non-life insurance companies in Bangladesh have settled just 10 percent of claims in the first nine months of this year, as per data of the Insurance Development and Regulatory Authority (IDRA).
During the same period last year, it was 15 percent.
Between January and September of this year, the claims amounted to Tk 3,140 crore. In the corresponding period in 2023, it was Tk 1,951 crore.
Comparing the data available for a full year, some 41 percent of claims were found to have been settled in 2023 whereas 35 percent in 2022.
The top executives of private insurance companies blamed it on policyholders’ inability to provide documents required to verify claims.
As per the Insurance Act 2010, claims must be settled within 90 days of application.
There are currently 46 non-life insurers in the country and those that are found to be delaying claim settlements without a valid reason are fined, said Zahangir Alam, a director and spokesperson of the IDRA.
Speaking on condition of anonymity, an official of Sadharan Bima Corporation, the only state-owned non-life and reinsurance company in Bangladesh, said most of their unsettled claims are reinsurance claims.
Reinsurance is insurance for insurance companies.
He informed that they received claims worth Tk 1,558 crore during the January-September period of this year, of which just nearly 5 percent was settled.
The official explained that many claims could not be processed as their veracity was doubtful as those who made the claims could not provide supporting documents.
“We have a backlog of claims dating back to 2012, which has exacerbated the situation. Many claims from the following six years remain unresolved,” he said.
The official cited an example, such as a claim by an insurer which was seeking to provide insurance coverage for a fire at a warehouse of S Alam Group in Chattogram last March.
“We have not yet received the documents we requested from the insurance company, Northern General Insurance Company Limited,” he said.
This document can only be provided by the Department of Fire Service and Civil Defence and this department has not provided it yet, said Md Hossain, manager for administration of S Alam Group, told The Daily Star.
The Sadharan Bima Corporation official also said most claims stemming from the damage caused during the unrest in the last July-August period are facing settlement delays for the same reason.
“We are not getting survey reports on time. Sometimes it takes two or three years to get this report from the companies,” he added.
The official informed that efforts are underway to address the backlog, with the corporation’s board targeting to settle 50-60 claims per month.
He also said generally the insurers do not pay their premiums on time.
In this situation, the corporation took a decision last year that if an insurer does not pay even one premium on time, the policy will be cancelled.
Khaled Mamun, chief executive officer of Reliance Insurance, said they received claims worth Tk 148 crore in the nine months of this year, of which 64 percent has been settled.
“We have some large commercial claims that are managed under the guidance of reinsurers, and the surveyor reports for these claims are still pending,” he added.
He further said delays often occur because policyholders fail to submit proper information.
“These claims are primarily related to property damage caused by fire and flood,” he added.
Mamun emphasised that while the law mandates settling claims within 90 days, insurers cannot proceed without the necessary documentation.
Md Moniruzzaman Khan, executive director of Green Delta Insurance, said they received claims worth Tk 305 crore in the first nine months of this year, of which only 3 percent has been settled.
“The documents requested from policyholders have not yet been received, which is why a good number of customers’ claims have not been paid on time,” he added.
IDRA Spokesperson Alam said the regulator has sought to know about measures taken by the insurers to resolve this issue.