Bangladesh Bans Life Insurers From Forcing Claimants to Buy New Policies
Bangladesh has introduced a restriction on life insurers linking claim payments to the purchase of fresh policies.
Bangladesh has barred life insurers from forcing claimants to purchase new policies to receive their insurance benefits
NEW DELHI: Bangladesh’s insurance regulator has told life insurers they can no longer make a customer’s claim payout depend on buying another policy. The Insurance Development and Regulatory Authority (IDRA) issued the directive in a circular dated 15 October 2026 and sent it to the senior management of all life insurance companies. The regulator said the practice breaks the law and works against the interests of policyholders.
Bangladesh: What the regulator found
According to the circular, IDRA had observed that some life insurers were making the purchase of a new policy a precondition for settling maturity claims, death claims and survival benefits. Some companies went further and took the first premium for the new policy directly out of the money owed on the old one, handing over only what remained. Policyholders, and nominees claiming after a death, were therefore receiving less than their full entitlement.
IDRA noted that the existing legal framework requires insurers to settle claims in full within 90 days. The regulator also said that linking payouts to new sales was causing dissatisfaction among customers, harming their interests and damaging the reputation of the insurance industry.
Bangladesh: New rules on how claims must be paid
Under the circular, insurers must transfer the entire amount payable on a claim to the bank account of the policyholder or nominee in a single transaction. No amount may be deducted from the proceeds, apart from government revenue that applies by law. Buying new coverage can no longer be asked of a claimant as a condition for receiving money already owed to them.
The circular also introduces restrictions on selling new policies to customers whose maturity claims are paid late. If an insurer settles a maturity claim after the 90-day deadline but within the following 30 days, it cannot issue a new policy to that same policyholder for 30 days from the date of the final payment. If the claim is paid 120 days or more after it fell due, the bar extends to 180 days from the date of final payment. An insurer that settles a maturity claim in full within the 90-day period faces no such restriction.
Bangladesh – Background: a sector under pressure over claims
The directive comes as the regulator works to speed up claim settlement across the sector. IDRA data cited in local reporting show that life insurers settled about 66 percent of claims in 2025, down from around 85 percent in 2020. Of the roughly Tk6,812 crore in life claims outstanding as of March 2026, about Tk4,410 crore, or 64.73 percent, remained unpaid. Bangladesh has 36 life insurers, including the state-owned Jiban Bima Corporation.-
In recent weeks IDRA has also run a special programme to clear long-pending claims. On 3 September, IDRA Chairman Mir Nadia Nivin handed over cheques worth about Tk14.51 crore to 2,549 policyholders of seven life insurers. A second phase followed with about Tk23.03 crore for 5,868 policyholders, bringing the total to around Tk37.55 crore for 8,417 policyholders.
With the new circular, the 90-day limit and the sales freezes give the regulator a direct lever over how quickly insurers pay maturity claims. Policyholders and nominees who are asked to buy a new policy in exchange for their payout, or who find deductions in the amount they receive, can now cite the circular when raising complaints with the regulator.
