Life insurance policy lapses surge to 3.36 lakh in Q3

More than 3.36 lakh life insurance policies were lapsed or cancelled during the third quarter of 2025, underscoring persistent challenges in Bangladesh’s life insurance sector, according to the latest report by the Insurance Development and Regulatory Authority (IDRA).
Among the country’s 36 life insurance companies, a total of 3.36 lakh and 590 policies were terminated between July and September, marking a nearly 3.5% increase from the previous quarter, when 3.25 lakh and 266 policies lapsed during April-June.
Sonali Life Insurance Company Limited recorded the highest number of policy lapses in the third quarter, with 64,305 terminations. National Life Insurance followed with 46,874 cancellations, whilew Prime Islami Life ranked third with 19,180 lapsed policies.
A similar pattern was observed in the second quarter, when Sonali Life topped the list with 73,267 lapsed policies, followed by National Life with 46,763.
On an annual basis, total lapsed life insurance policies stood at 15.4 lakh in 2023, declining to 12.5 lakh in 2024, indicating a partial improvement despite continued volatility in the sector.
In the insurance industry, a policy is considered lapsed when a policyholder fails to pay premiums within the stipulated period. Once a policy lapses, coverage ceases and, in many cases, policyholders are unable to recover the premiums already paid.
Industry insiders note that although life insurance plays a vital role in the national economy – alongside banks, non-bank financial institutions and the capital market – the sector continues to struggle with a trust deficit. 
Weak governance, limited transparency and recurring policy lapses have undermined confidence, which has yet to be fully restored despite public and private initiatives.
Multiple factors contribute to policy lapses. Industry sources say insurance agents are often attentive during policy sales but provide inadequate follow-up in subsequent years. 
Low policyholder awareness, allegations of broken commitments and instances of fraudulent agents misappropriating premiums have further eroded trust.
S M Ibrahim Hossain, former director of the Bangladesh Insurance Academy, said policy lapses are damaging for both insurers and customers. 
“Policyholders lose financial protection during unexpected events, while companies suffer revenue losses and face adverse impacts on financial stability and customer relationships,” he said.
Company-wise data from IDRA for the third quarter show that Prime Islami Life recorded 19,180 lapsed policies, 
Progati Life 17,219, Rupali Life 17,688, Swadesh Life 17,037, Sandhani Life 15,757, Popular Life 13,483, Delta Life 27,608 and Alpha Islami Life 15,868.
Industry insiders also note that a significant portion of lapsed policies are of relatively small value. 
In many cases, policyholders reactivate their policies after clearing outstanding premiums within weeks or months, reducing the long-term impact.
According to IDRA data, more than 26 lakh life insurance policies were cancelled or lapsed between 2009 and 2023. Over the same period, the number of active policies declined from 1.12 crore in 2009 to 85.88 lakh in 2023.
Experts warn that restoring confidence in the life insurance sector will remain difficult without stronger supervision, a corruption-free operating environment, enhanced customer protection and easier access to services.
S M Nuruzzaman, executive member of the Bangladesh Insurance Association and chief executive officer of Zenith Islami Life Insurance, said insurance is essential for sustainable economic development. 
He stressed that both regulatory oversight and corporate responsibility are critical, adding that companies must take the lead in reducing policy lapses through timely premium collection, better agent training and stronger governance.
Dr Hasina Sheikh, professor at the Department of Banking and Insurance at the University of Dhaka, said agents in Bangladesh often prioritise selling new policies over ensuring premium collection in later years. 
She attributed this to commission structures that provide strong first-year incentives but little motivation for long-term servicing.
She also emphasised the need for greater focus on policy continuity and customer education, noting that many policies are sold under agent persuasion without adequate understanding, while companies fail to clearly communicate the consequences of lapses.
Md Jalalul Azim, chief executive officer of Progati Life, said the high level of pending claims in the life insurance sector is another major concern. 
“Having around 65% of claims pending across life insurance companies is not a good sign. A few companies are responsible for such high levels, and the regulatory authority should take action against them,” he said.