TBT DESK: Bangladesh’s general insurance sector is facing a growing credibility crisis, with nearly three-quarters of insurance claims still unsettled, according to industry data that has raised serious concerns over financial stability and public trust.

Figures from the Insurance Development and Regulatory Authority (IDRA) show that out of claims worth around Tk 4,678 crore raised across 46 non-life insurance companies between January and December 2025, only Tk 1,169 crore—roughly 25 per cent—was settled. The remaining Tk 3,509 crore, or 75 per cent, remains outstanding.

The backlog has triggered alarm among policyholders and industry observers, with several multinational firms reportedly scaling back or withdrawing insurance coverage in Bangladesh due to delayed settlements and concerns over reliability.

Industry insiders attribute much of the strain to weaknesses in the reinsurance system, particularly delays in payments from the state-owned Sadharan Bima Corporation. Many companies depend heavily on reinsurance recoveries to settle large claims, and any disruption in that chain quickly creates liquidity pressure across the sector.

However, officials at the corporation have rejected claims of systemic failure, insisting that payments are made once proper documentation is submitted. They argue that many outstanding cases are held up due to incomplete paperwork from insurers rather than institutional delays.

Despite this explanation, the concentration of unpaid claims among several major firms has intensified scrutiny. The state-run insurer alone accounts for more than Tk 2,186 crore in outstanding liabilities, having settled only around 12 per cent of its obligations during the period under review.

Private sector companies such as Green Delta Insurance and others have also reported significant arrears, although a handful of insurers have managed to maintain relatively strong settlement ratios above 80 to 90 per cent.

Analysts warn that the uneven performance highlights structural weaknesses in governance, risk management and reinsurance practices across the sector. They caution that if the trend continues, it could further erode confidence in Bangladesh’s insurance market and discourage both domestic and foreign investment.

A senior chief executive of a leading insurance company described the situation as “deeply worrying,” noting that a healthy claims settlement ratio should typically exceed 80 per cent. He added that persistent delays are already damaging the industry’s reputation and weakening public trust in insurance as a financial safety net.

As pressures mount, stakeholders are calling for urgent reforms in reinsurance management, claims processing transparency and regulatory oversight to restore confidence in a sector widely considered essential for economic resilience.