Life insurers overspend Tk260cr amid unpaid claims

Despite thousands of crores of taka in unsettled insurance claims, many life insurers in Bangladesh continue to exceed legally permitted management expense limits, spending more than Tk260 crore above approved ceilings over the past 15 months, according to regulatory data.
Figures from the Insurance Development and Regulatory Authority (IDRA) show that 22 life insurance companies overspent by about Tk54.33 crore on management expenses during the January-March quarter of 2026 alone. 
In 2025, excess spending by life insurers exceeded Tk215 crore.
Industry insiders say the trend undermines financial discipline and raises concerns about policyholder protection, particularly at a time when several insurers are struggling to clear large volumes of outstanding claims.
Management expenses include administrative and operational costs such as salaries and benefits, commissions, office rent, marketing and promotional activities, information technology expenses, travel costs and other business-related expenditures.
Under the Insurance Act 2010, insurers are required to operate within prescribed management expense limits. 
Companies exceeding the approved ceiling may be required to reimburse the excess amount from their profits or own funds. 
The law also allows for financial penalties, licence suspension or cancellation, and accountability measures against directors and senior executives.
Speaking to the Daily Sun, IDRA Media and Communications Adviser Saifunnahar Sumi said the regulator continuously monitors insurers’ management expenses to ensure compliance.
“Companies found exceeding the prescribed limits are called for hearings, and legal action is taken where necessary,” she said, adding that the regulator can impose a maximum penalty of Tk5 lakh on an offending company.
SM Nuruzzaman, executive committee member of the Bangladesh Insurance Forum (BIF) and chief executive officer of Zenith Islami Life Insurance, said declining public confidence has severely affected new policy sales across the sector.
“The failure of a few companies to settle claims has damaged the reputation of the entire industry, reducing premium income and making it difficult for even compliant insurers to keep expenses within regulatory limits,” he said.
He noted that business acquisition and promotional costs have increased significantly, while management expense limits are largely calculated on the basis of annual premium collections. 
However, he stressed that regulators should remain vigilant against the misuse of management expenses as a channel for siphoning off funds.
Insurance analyst and former chief executive officer of Chartered Life Insurance S M Ziaul Hoque identified supervisory commission structures as a major contributor to excessive management spending.
“Commissions at supervisory levels are too high. Supervisory personnel should be compensated through performance-based salaries, or commission rates should be significantly reduced,” he said.

He also criticised the current penalty framework as ineffective.
“A company may overspend by several crores of taka, yet the maximum fine is only Tk5 lakh. Moreover, the penalty is paid from company funds rather than by the individuals responsible. Accountability must be personal,” he added. According to IDRA data, the 22 insurers that exceeded spending limits in the first quarter of 2026 had a combined allowable management expense ceiling of around Tk848 crore. Actual expenditure reached approximately Tk902 crore.
MetLife Bangladesh recorded the highest excess spending during the quarter, exceeding its approved limit by Tk11.67 crore while carrying unsettled claims worth more than Tk61 crore.
State-owned Jiban Bima Corporation overspent by about Tk9.50 crore, while Prime Islami Life Insurance exceeded its limit by Tk4.29 crore despite having outstanding claims of Tk25.45 crore.
Far East Islami Life Insurance drew particular attention after exceeding its management expense ceiling by Tk8.36 crore while carrying nearly Tk3,310 crore in unsettled insurance claims. 
Significant claim backlogs also remain at Padma Islami Life Insurance, Sunflower Life Insurance, Progressive Life Insurance and Sunlife Insurance.
The trend was equally pronounced in 2025. IDRA data show that the country’s 36 life insurance companies were permitted to spend Tk3,801.14 crore on management expenses, but actual expenditure reached Tk4,014.86 crore, resulting in excess spending of more than Tk215 crore.
Far East Islami Life Insurance topped the list of overspenders in 2025, exceeding its approved limit by Tk28.51 crore, followed by Shanta Life Insurance with excess management expenses of Tk14.75 crore.

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