The insurance regulator has cautioned a section of life insurers that have indulged in marketing deceptive products to lure customers.
The Insurance Development and Regulatory Authority (IDRA) said it has found many products, including popular 3-installment insurance product, with fabricated information that does not match the results at maturity.
It said many insurers are involved in deceptive practices for long, especially in the rural areas while procuring new business.
The IDRA already issued a circular in this connection last week asking all 31 life insurance companies to take its prior permission before launching any new product for the life segment.
It also said the circular should be treated as a primary guideline while designing new life products by the life insurers.
IDRA Chairman M Shefaque Ahmed said: "From now and onwards all life insurers must submit to us the product list with their respective prospectuses along with actuarial valuations while planning to launch new products."
Mr Ahmed said in many cases, while evaluating the existing life-products, the IDRA found that there is a large mismatch between the promises made in the prospectuses and the final outcome.
The IDRA will begin a massive drive against the marketing of any type of fabricated product shortly.
IDRA sources, however, said the authority concerned expects that the new companies would start their businesses offering a bundle of new products which will include protection, savings, retirement, investment and health.
"We wanted the new insurers to bring new products aiming to enhance market penetration and broaden choices and service for policyholders," said a member of the IDRA.
"We're not seeing new products in the industry," he said with frustration.
The authority issued 14 new operating licenses for the life insurers over the last six months.
The newly-approved insurers have started an aggressive marketing based on fabricated information in the prospectuses, it is learnt.
The insurance industry has a 75-year history but its business revolves round only limited products.
Currently, they have been selling around 30 products, mostly endowment plans although neighbouring India with the same history since 1938 has several hundred products.
It lacks the main life products like term and variable products, IDRA sources said.
The IDRA said it will later formulate a comprehensive new guideline for launching new life-products and its withdrawal to intensify competition among the insurers.
"We want insurance products to be more customer-friendly and transparent," Mr Ahmed added.
According to the IDRA, insurers need to withdraw and re-file existing traditional group and endowment plans and traditional individual plans while it will formulate new comprehensive guideline.
Bangladesh has now a total of 31 life insurance companies. The market size by premium earnings of life insurance is around Tk 60 billion.
The insurance penetration is less than 5.0 per cent with US-based MetLife Alico having the highest number of policy holders, over 1.3 million.
