Insurance Law in Bangladesh

Insurance law in Bangladesh governs the regulation, administration, and management of insurance companies and their policies. It aims to protect policyholders, ensure the financial stability of insurance companies, and foster a healthy insurance market. Lawyer Dhaka is here to state an overview of the key aspects of insurance law in Bangladesh:

1. Primary Legislation:

• Insurance Act 2010: This is the principal law governing the insurance sector in Bangladesh, replacing the previous Insurance Act of 1938. It regulates the licensing, operations, and management of insurance companies, both life and non-life (general insurance), as well as reinsurance businesses.
• Insurance Rules 1958: These rules provide detailed procedures for the implementation of the Insurance Act, including regulations on insurance agents, brokers, and the operation of insurance companies.

2. Regulatory Authority:

• Insurance Development and Regulatory Authority (IDRA): Established under the Insurance Act 2010, the IDRA is the main regulatory body overseeing the insurance industry. It ensures compliance with laws and regulations, monitors the financial health of insurance companies, and protects policyholders’ interests.

3. Types of Insurance:

• Life Insurance: Covers individual life policies, group life insurance, annuities, and other long-term policies. Key players include state-owned companies like Jiban Bima Corporation and private insurers.
• General Insurance: Includes various types of non-life insurance such as property, marine, motor vehicle, health, and liability insurance. State-owned Sadharan Bima Corporation and private insurers operate in this sector.
• Microinsurance: Tailored for low-income individuals, providing coverage for health, life, or property at affordable premiums.

4. Licensing and Registration:

• Licensing Requirements: All insurance companies, agents, brokers, and surveyors must be licensed by the IDRA to operate legally in Bangladesh. The process involves meeting specific financial and operational criteria.
• Registration: Insurance companies must register with the Registrar of Joint Stock Companies and Firms (RJSC) and comply with ongoing reporting and regulatory requirements.

5. Policyholder Protection:

• Consumer Rights: The Insurance Act mandates clear disclosure of policy terms, conditions, and benefits to protect policyholders. It also provides avenues for grievance redressal through the IDRA.
• Solvency and Capital Requirements: Insurance companies are required to maintain a certain level of capital and solvency margins to ensure they can meet their obligations to policyholders.

6. Premium Collection and Claim Settlement:

• Premium Payments: The law specifies how premiums should be collected, including deadlines and grace periods for payment. It also regulates the investment of premium funds by insurance companies.
• Claims Process: Insurance companies are required to settle claims promptly and fairly. Delays or unjust denials can lead to penalties and legal action. Disputes can be addressed through arbitration or legal proceedings.

7. Reinsurance:

• Reinsurance Requirements: Insurance companies are required to reinsure a portion of their risks to manage potential large-scale claims. The IDRA monitors reinsurance agreements to ensure they are adequate and reliable.

8. Corporate Governance and Reporting:

• Corporate Governance: The Insurance Act and related regulations require insurance companies to adhere to good corporate governance practices, including transparent management, ethical conduct, and regular audits.
• Financial Reporting: Insurance companies must submit periodic financial statements and reports to the IDRA, ensuring transparency and accountability.

9. Penalties and Enforcement:

• Penalties for Non-Compliance: The Insurance Act prescribes penalties for companies, agents, and brokers who violate its provisions, ranging from fines to suspension or cancellation of licenses.
• Dispute Resolution: The law provides mechanisms for resolving disputes between insurers and policyholders, including arbitration and legal action in the courts.

10. Recent Developments and Trends:

• Digital Insurance: The growth of digital platforms has prompted discussions on regulatory frameworks for online insurance sales and digital policy management.
• Takaful (Islamic Insurance): Growing interest in Sharia-compliant insurance products has led to the development of Takaful offerings in Bangladesh, though this area is still evolving.

11. Social and Agricultural Insurance:

• Government Schemes: The government has introduced various social and agricultural insurance schemes to support vulnerable populations, such as crop insurance for farmers.

Insurance law in Bangladesh is designed to create a stable and trustworthy insurance market, balancing the interests of consumers and businesses while ensuring compliance with legal and financial standards.