Insurance Law in Bangladesh 2026: Regulation, Claims, Disputes and Reform

Insurance law Bangladesh: how the 2026 framework works

Insurance law Bangladesh businesses and families rely on rests on two statutes passed on the same day in 2010: the Insurance Act 2010, which governs insurers, policies, intermediaries and claims, and the Insurance Development and Regulatory Authority Act 2010, which created the regulator, IDRA.[1] [3] The rules on paper are strong. Claims must be paid within 90 days or carry penal interest, life policies become hard to challenge after two years, and a dedicated Dispute Resolution Committee hears claim disputes outside the courts.[1]

The market tells a harder story. In July 2026 the new IDRA chairman put unpaid claims at nearly Tk 7,000 crore and made clearing them her first priority.[10] This guide explains how the framework works in 2026: who regulates whom, how insurers and intermediaries are licensed, which covers are compulsory, what policyholders are entitled to, how claim disputes are resolved, and which reforms are moving. Marine cargo and hull claims, workplace benefits and motor liability are covered in companion TRW guides linked below.

Summary: The Insurance Act 2010 regulates insurers, policies, agents, brokers, surveyors and claims, and IDRA supervises the market under the IDRA Act 2010. An insurer that fails to pay a due and fully documented claim within 90 days owes interest at 5 per cent above bank rate under section 72. Claim disputes go to IDRA (on quantum) or to its Dispute Resolution Committee, with a 30-day route to court, or to the civil courts, which must apply Bangladeshi law. Since 2023 banks may sell insurance as corporate agents, and since 1 January 2026 non-life insurers may not pay agent commission.

Key point: Policyholders have more leverage than most realise. Section 72 makes late payment expensive, section 68 bars most misstatement defences on life policies after two years, and in June 2026 the High Court Division upheld a Tk 5.09 crore Dispute Resolution Committee award against an insurer that repudiated a fire claim on a building-classification discrepancy it could not explain. The difficulty is enforcement against distressed insurers, not the content of the law.

At a glance

Swipe or scroll →

Table of Contents

The statutory framework of insurance law Bangladesh applies

The Insurance Act 2010 (Act No 13 of 2010) repealed and re-enacted the Insurance Act 1938, which had governed the market since before partition.[1] It runs to 160 sections across seven chapters: registration, capital and deposits, accounts and audit, investments, policyholder protections, governance, administrators and winding up, intermediaries, offences and miscellaneous powers. The Bangla text is authoritative. Section 159 required an authentic English text, and the Ministry of Finance published it by S.R.O. No. 161-Law/2018 on 29 May 2018, but the Bangla text prevails in any conflict.[1] [2]

The Insurance Development and Regulatory Authority Act 2010 (Act No 12 of 2010) established IDRA, headquartered in Dhaka, with a chairman and four members who serve three-year terms and may be reappointed once.[3] In 2026 the elected Parliament passed the Insurance Development and Regulatory Authority (Amendment) Act 2026, gazetted as Act No 94 of 2026 on 4 May 2026.[4]

What IDRA is required to do

Section 15 of the IDRA Act lists the regulator's functions. They include regulating insurers and reinsurers; registering insurers, reinsurers and intermediaries; licensing surveyors; setting codes of conduct for agents; protecting policyholders and beneficiaries on nomination, insurable interest and surrender values; controlling solvency margins, funds and investments; creating a fund to protect policyholders; settling disputes between insurers and intermediaries; establishing separate branches to resolve insurance complaints; and forming a central rating committee for non-life rates and terms.[3]

Licensing insurers, capital and foreign ownership

Licensing is where insurance law Bangladesh regulators apply most directly. Section 8 prohibits any person from carrying on insurance business without a registration certificate from IDRA.[1] Section 21 bars registration unless the applicant has the paid-up capital specified in Schedule 1, which the Government may raise or lower by gazette notification. Sponsors must deposit their shares of paid-up capital, free of encumbrance, in a scheduled bank account in the company's name before applying, and no money other than interest may be withdrawn from it without IDRA's written permission.[1] Section 23 requires a statutory deposit with Bangladesh Bank in cash or approved securities.[1]

Suspension and cancellation

Section 10 lets IDRA suspend or cancel registration, wholly or for a class of business, on grounds that include failure to maintain the solvency margin, conduct against policyholders' interests, unethical management, failure to keep the statutory deposit, and a claim left unpaid for three months after a final court judgment or an IDRA order.[1] Suspension follows a 30-day show-cause notice, may last up to three months, and stops the insurer issuing new policies while it runs.

Foreign sponsors and shareholding limits

Section 22 allows a foreign sponsor to buy or hold shares in an insurance company, subject to conditions in rules and to a maximum limit fixed by the Government.[1] Under insurance law Bangladesh investors must also satisfy the paid-up capital and sponsor-deposit rules and the governance limits in sections 74 to 80; section 80 prohibits appointing a chief executive officer without IDRA's approval.[1] Draft amendments published by IDRA in 2025 would add a 10 per cent cap on holdings by any individual, institution or family, directly or indirectly.[12] Structuring, repatriation and investment registration are covered in our guide to foreign investment law in Bangladesh.

State insurers and the reinsurance rule

The state-owned Sadharan Bima Corporation (SBC) occupies a privileged position in non-life business. Private non-life insurers must reinsure 50 per cent of their risks with SBC, and under the existing law SBC underwrites all non-life business on government property and foreign-financed projects, keeping half and sharing the rest equally among private insurers.[11] In December 2025 a draft Insurance Corporation (Amendment) Ordinance 2025 proposed relaxing these rules in the context of tariff talks with the United States; it had not been finalised at that time.[11] The Legislative Division's list of 2026 Acts shows no corresponding Act.[4]

Agents, brokers, surveyors and bancassurance

Chapter IV of the Insurance Act regulates intermediaries, the part of insurance law Bangladesh distribution depends on. Under section 124, an insurer or broker appoints and registers individual insurance agents, keeps a register of them in the form IDRA prescribes, sends IDRA a copy every year and reports changes quarterly.[1] IDRA can require an unsuitable agent's name to be struck off, and no insurer may poach an agent registered with another without a release order, which must be given within 15 days of a resignation if nothing is owed. Section 125 adds agent employers for life business. Commission is capped by sections 58 and 59, and an unregistered agent cannot receive commission.[1] [2]

Zero commission in non-life from 2026

From 1 January 2026, IDRA enforced a zero-commission policy for non-life insurance and suspended the licences of individual non-life agents. The measure followed a proposal from the Bangladesh Insurance Association and a November 2025 meeting with non-life chief executives. Insurers were told to generate business through salaried officers instead, and industry figures said some companies had previously spent as much as 60 per cent of premium on illegal commission.[9] For corporate buyers, the change means that any request for a "commission" or rebate on a non-life policy is now a red flag.

Brokers and surveyors

Section 126 allows non-life insurers to appoint licensed insurance brokers, but only companies may hold a broker licence, and acting or holding out as a broker without one is unlawful.[1] In January 2026 brokerage licences had still not been issued in practice.[9] Surveyors matter more to claims. Section 127 bars anyone but a licensed surveyor from surveying or assessing non-life losses, and section 128 lets IDRA order a second survey where it believes a surveyor filed a false report or grossly over- or under-assessed the loss.[1]

Bancassurance under the 2023 guidelines

A Government notification of 12 December 2023 recognised the sale of insurance as a permissible business for banks under section 7(1)(la) of the Bank Company Act 1991, and Bangladesh Bank issued its Bancassurance Guidelines for Banks by BRPD Circular No 18 of 20 December 2023.[8] A bank needs Bangladesh Bank's prior approval and a corporate agent licence from IDRA. Eligibility requires capital adequacy of at least 12.5 per cent with the conservation buffer, a CAMELS rating of at least 2, net non-performing loans of no more than 5 per cent and three consecutive years of profit. Banks that share beneficial owners with the insurer are excluded.[8]

The guidelines are protective in substance. A bank may partner with no more than three life and three non-life insurers at a time, may not agree exclusivity, and may sell only to its own account or card holders and their immediate families, never to walk-in customers.[8] Non-life sales are limited to motor, travel, agriculture and crop insurance, while group life and group health products may be sold to corporate customers. Banks must not coerce customers, must not debit premiums without written consent, must not offer terms different from the insurer's, and must run a complaint mechanism. Claims remain the insurer's responsibility: the bank facilitates, and the insurer settles directly with the insured or nominee.[8]

Compulsory insurance in Bangladesh

Insurance law Bangladesh enforces has no general compulsory insurance code. Compulsion comes from scattered provisions, and the most commercially important is section 19 of the Insurance Act: no person may insure abroad any risk on property or interests in Bangladesh without an IDRA certificate that the risk cannot be covered locally. IDRA may grant exemptions and must give written reasons within 15 days if it refuses a certificate.[1] This is why import cargo is insured with a Bangladeshi insurer even where the seller arranges cover; our guide to marine insurance claims in Bangladesh explains how that rule plays out for cargo and hull claims.

Group insurance for workers

Section 99 of the Bangladesh Labour Act 2006 requires every establishment with at least 100 permanent workers to maintain group insurance under the insurance law. The claim money is additional to the worker's other dues; on a death the employer must recover the claim and pay the dependants directly, and the insurer and employer must settle the claim jointly within 120 days. Where the Government has set up a central fund for a sector, group insurance is not required and an equivalent sum is paid from the fund.[13] Thresholds, the EPZ rule and costs are set out in our guide to employee benefits in Bangladesh.

Motor, health and lender-required cover

Motor third-party cover is not currently compulsory; our guide to traffic laws in Bangladesh explains the voluntary motor liability pilot and the statutory compensation fund that sits beside it. There is no compulsory private health insurance. The state's main health protection experiment, Shasthyo Surokhsha Karmasuchi, launched in Kalihati, Tangail in March 2016 and later extended to Madhupur and Ghatail; the Government pays a premium of Tk 1,000 per below-poverty-line household a year for inpatient cover of up to Tk 50,000 per household a year.[5] In practice, much non-life cover is compelled by contract: banks require fire and allied-perils insurance over hypothecated stock, as the cases below show.

Wider pension and social insurance reforms are covered in our guide to social security law in Bangladesh.

Policyholder rights under insurance law Bangladesh courts enforce

The Insurance Act contains a set of policyholder protections that are often overlooked when claims go wrong.

Nomination and assignment

Section 57 allows the holder of a life policy on his own life to nominate the person to receive the policy money, at issue or at any time before maturity, and to change the nomination. An insurer that pays a registered nominee in good faith is discharged unless it has notice of a change. Section 56 governs assignment: an assignment is not effective against the insurer until written notice is delivered, and from receipt of the notice the assignee alone is entitled to the benefit.[2] Families should register nominations and record any assignment to a lender; where there is no valid nomination, heirs may need a succession certificate before the insurer will pay.

The two-year rule on life policies

Section 68 bars an insurer from calling a life policy into question, after two years from the date it took effect, on the ground that a statement in the proposal, medical report or any other document was inaccurate or false. The exception is narrow: the insurer must show that the statement concerned a material matter or suppressed facts that were material to disclose, and that the policyholder made it fraudulently, knowing it to be false. The insurer may still require proof of age and adjust the policy terms accordingly.[1]

Local law and local courts

Section 69 provides that, whatever a policy says, the holder of a policy on business transacted in Bangladesh may receive the sum assured in Bangladesh and sue in a competent Bangladeshi court, and questions of law must be decided under Bangladeshi law. Marine policies are excluded.[1] A foreign governing-law or exclusive-jurisdiction clause in a non-marine policy will not displace that right.

Protection funds and fair selling

Section 156 requires IDRA to create a Life Insurance Policyholders' Protection Fund financed by a levy on life insurers, for the general protection of life policyholders.[1] Section 133 makes it an offence to induce anyone to take out a policy by statements, promises or forecasts known to be misleading, false or deceptive, punishable by a fine of up to Tk 10 lakh, imprisonment of up to three years, or both.[1] Mis-selling complaints therefore have a criminal dimension, although under section 140 a court may take cognisance only on a written complaint by the IDRA chairman or an authorised officer.[1]

Claim settlement timelines and section 72 interest

Section 72 is the centrepiece of insurance law Bangladesh claimants invoke. Where money is payable under a policy and the claimant has submitted all the papers required for the claim, the insurer must pay within 90 days of the claim falling due or of the claimant completing all formalities, whichever is later. If it does not, it must pay interest for the period of delay at 5 per cent above the prevailing bank rate, calculated on a monthly basis, unless it proves that the failure was beyond its control.[1]

Two practical points follow. First, the clock turns on documents, so claimants should submit a complete file, keep receipts for every document delivered and ask in writing what else is required. Second, the "beyond its control" defence is for genuine external causes, not an insurer's own liquidity problems. A section 72 claim for interest should be pleaded expressly before IDRA, the Dispute Resolution Committee or a civil court.

Surveys and documents in non-life claims

Non-life claims turn on the survey. Because only a licensed surveyor may assess a loss under section 127, the surveyor's report is usually the most important document in the file.[1] Courts treat an insurer that appoints its own surveyors and then ignores their assessment with scepticism. In Purabi General Insurance v Riad Salt Industries, decided on 24 February 2026, the High Court Division affirmed a money decree on a 1997 cyclone claim, noting that the insurer had never sought a second survey under the Insurance Rules 1958 and rejecting its attempt to recall witnesses in a case pending for 27 years.[7]

Disputed life claims and payment into court

Where a life policy has matured but the insurer cannot obtain a valid discharge, because of competing claims, inadequate proof or another sufficient reason, section 70 allows it to apply to court to pay the money in. The application must be supported by the chief executive's affidavit, cannot be made within six months of maturity or notice of death, and must be made before nine months have passed.[1] The court's receipt discharges the insurer, which bears the costs.

Swipe or scroll →

Resolving disputes under insurance law Bangladesh provides

Practitioners have four routes for a claim dispute, and the choice decides speed, cost and finality. The table below compares them. On a phone, scroll it sideways.

IDRA determination of quantum under section 71

Section 71 allows a claimant, at its option, to refer a dispute about the amount of a claim under a life policy below a threshold set by rules, or under a non-life policy, to IDRA. The Authority hears the parties, takes the evidence it considers necessary and decides. Its decision is final, cannot be questioned in any court, and is enforceable as if it were a decree of a competent court. IDRA may charge a fee.[1] The route suits a dispute that is purely about numbers, but its finality cuts both ways.

The Dispute Resolution Committee under section 73

For other claim disputes between insurers and policyholders, section 73 requires IDRA to form one or more Dispute Resolution Committees, whose composition and procedure are set by regulation. The Arbitration Act 2001 does not apply to them, no person with an interest in the dispute may sit, and their jurisdiction covers life and non-life claim disputes except those under group policies. A person aggrieved by a committee decision may go to court within 30 days.[1] The committees operate under the IDRA (Dispute Resolution Committee) Regulations 2012.[6]

The June 2026 decision in Mercantile Insurance Co Ltd v Government of Bangladesh shows how the route works and how long it can take. A bank-financed trader's insured stock was destroyed by fire in November 2015; the insurer's own surveyors assessed the loss at Tk 5,09,42,011, but the insurer repudiated because its cover note described the godown as first-class construction. The committee ordered payment with interest in April 2017, and the insurer appealed to the High Court Division under section 73(5).[6]

On 17 June 2026 the High Court Division dismissed the appeal. It held that the burden of proving concealment, misrepresentation or breach of utmost good faith lies on the insurer; that a mere discrepancy is not enough without proof that the insured knowingly made a false statement of a material fact; and that contradictions arising from the insurer's own conflicting cover notes cannot prejudice the insured. It treated the committee's findings as findings of fact and directed payment with statutory interest within 60 days.[6] The award stood, but nine years after the committee's order.

Civil suits and the Commercial Courts

Policyholders may also sue for the claim in the civil courts, and section 69 guarantees that right for non-marine policies on Bangladeshi business.[1] Money suits have historically been slow: Purabi began in 1998 and ended on appeal in 2026.[7] The Commercial Court Ordinance 2026, now the Commercial Courts Act 2026, includes insurance matters in its definition of commercial disputes and introduces mandatory pre-suit mediation and a 90-day limit for concluding trial from the date fixed for final hearing.[14] Our guide to the Commercial Courts Act in Bangladesh explains thresholds and procedure, and civil suit filing in Bangladesh covers the ordinary route.

Arbitration clauses in policies

Some commercial policies refer disputes, often on quantum, to arbitration. Such a clause is governed by the Arbitration Act 2001, but it does not bind the Dispute Resolution Committee, to which the Act is expressly disapplied.[1] Our guides to arbitration clauses in Bangladesh and arbitration versus litigation address drafting and enforcement.

Appeals against regulatory orders

There is no specialist insurance appellate tribunal. Section 142 allows an appeal against IDRA orders refusing or cancelling an insurer's registration, directing a change of name, cancelling an agent employer's, broker's or surveyor's licence or removing an agent from a register, and against orders in winding-up proceedings. The appeal lies to the principal civil court with jurisdiction where the insurer's head office is located, must be filed within four months of receiving the order, and the decision is final.[1] Other regulatory action is reviewable, where available, through a writ petition before the High Court Division.

The life insurers' payout crisis, 2024 to 2026

The claims backlog is the central fact of the market. On 16 July 2026, the new IDRA chairman, Mir Nadia Nivin, said that clearing nearly Tk 7,000 crore in outstanding claims was her top priority, and that seven of the most financially distressed insurers accounted for almost Tk 4,000 crore of the unpaid total.[10]

The regulator's plan is mechanical rather than legislative. Treasury bonds, fixed deposits with sound banks and other marketable investments of the distressed insurers are to be sold in phases, the proceeds held in separate bank accounts supervised by independent auditors, and claims paid first-in, first-out. IDRA will work with Bangladesh Bank on deposits stuck in weak banks, move to risk-based supervision, issue every valid policy a unique ID sent to the policyholder's mobile phone, and pursue embezzlement where evidence exists. The chairman acknowledged that existing law does not allow penalties to be recovered from directors' personal assets.[10]

What the statute already allows

The Insurance Act gives IDRA heavier tools than it has historically used. Under section 95 it may suspend an insurer's board and appoint an administrator where business is being conducted against policyholders' interests or the solvency margin cannot be maintained. Under section 96 the administrator reports on whether the business should be transferred to another insurer, continued (for life business, with sums assured maintained or reduced), or wound up.[1] Section 130 allows fines of up to Tk 5 lakh for each failure to file returns, follow directions or maintain the solvency margin, plus Tk 5,000 a day while it continues, and section 135 deals with directors and officers who wrongfully obtain or withhold an insurer's property.[1]

What a policyholder of a distressed insurer should do

A claimant against a distressed life insurer should lodge a complete claim file, demand written acknowledgement, and calculate section 72 interest from day 91. If payment does not follow, a complaint to IDRA or a Dispute Resolution Committee case creates an order that, if unpaid for three months, is itself a ground for suspension under section 10.[1] Policyholders should also check that their policy has received IDRA's unique ID.

Reforms and drafts to watch in 2026

Insurance law Bangladesh lawmakers are now considering is wider than any change since 2010. The 2025 draft published for comment would let IDRA restructure or dissolve an insurer's board for up to two years, sell assets to settle claims, cap individual and family holdings at 10 per cent, cut first-year life agent commission from 35 to 25 per cent, impose fines of Tk 10 lakh to Tk 1 crore with daily penalties, and introduce prison terms of up to two years.[12]

Two further items are pending. The draft Insurance Corporation (Amendment) Ordinance 2025 on SBC's reinsurance and government-business monopoly had not been finalised, and the Legislative Division's 2026 list shows only the IDRA (Amendment) Act 2026 among insurance statutes.[4] [11] Until Parliament acts, contracts, claims and investments should be assessed on the 2010 Act as it stands.

Practical insurance law Bangladesh guidance for 2026

For businesses buying cover, the law rewards precision. Describe insured premises accurately in the proposal and cover note, keep copies of every cover note issued, and reconcile them with the policy; Mercantile shows that inconsistent paperwork tends to be construed against the insurer, but litigating that point took a decade.[6] Check that any risk insured abroad has an IDRA certificate under section 19, and that bancassurance sales comply with the 2023 guidelines.[1] [8]

For insurers, the exposure lies in delay and process. Section 72 interest accrues by operation of law, an unpaid decree or IDRA order threatens registration, and courts expect a reasoned repudiation backed by evidence of knowing misstatement rather than a technical discrepancy.[1] [6] For families, register nominations, keep policy documents together and claim promptly with a full file.

TRW acts on licensing, bancassurance, claims and committee cases; see our banking and finance litigation team or contact TRW.

Frequently asked questions

Which laws govern insurance in Bangladesh?

The Insurance Act 2010 governs insurers, policies, intermediaries and claims, and the Insurance Development and Regulatory Authority Act 2010 creates and empowers IDRA. The IDRA Act was amended in 2026.[1] [3] [4]

How long does an insurer have to pay a claim?

Ninety days from the claim falling due or the claimant completing all formalities, whichever is later. After that, section 72 interest runs at 5 per cent above bank rate unless the insurer proves the delay was beyond its control.[1]

Can an insurer reject a life claim for a mistake in the proposal form?

After two years, only if it proves the statement was material and made fraudulently, knowing it was false or that material facts were being suppressed. It may still require proof of age.[1]

Where do I complain about an unpaid insurance claim?

To IDRA, which can determine quantum disputes under section 71, or to an IDRA Dispute Resolution Committee under section 73. You may also sue in a civil or commercial court.[1] [14]

Can a Dispute Resolution Committee decision be challenged?

Yes. An aggrieved party may go to court within 30 days under section 73(5). In June 2026 the High Court Division heard such an appeal and upheld the committee's award.[1] [6]

Is motor third-party insurance compulsory in Bangladesh?

No, it is not currently compulsory. Our traffic laws guide explains the voluntary motor liability pilot and the road accident compensation fund.

Can banks sell insurance in Bangladesh?

Yes, as corporate agents, with Bangladesh Bank approval and an IDRA licence, for up to three life and three non-life insurers, and only to their own customers.[8]

Can I insure Bangladeshi property with a foreign insurer?

Not without an IDRA certificate that the risk cannot be covered in Bangladesh, unless IDRA grants an exemption under section 19.[1]

Can foreigners own shares in a Bangladeshi insurer?

Yes. Section 22 allows foreign sponsors to hold shares, subject to rules and a maximum limit fixed by the Government.[1]

Do non-life insurers still pay agent commission?

No. From 1 January 2026 IDRA enforced zero commission in non-life insurance and suspended individual non-life agent licences.[9]