Insurance regulator has strong suspicion that most field agencies of the country's 31 life-insurance companies have been gobbling up a substantial amount in the name of payments of commission to their agents who actually do not exist.
Officials at the Insurance Development and Regulatory Authority (IDRA) said around 80 per cent of the agents employed by the field-level agencies are fake, an allegation that has been termed as baseless by an insurance association leader.
However, the IDRA said this irregular financial practice is hurting the insurance industry as the limited number of agents often fails to handle large numbers of clients, leading to rise in the lapse of policies.
The rate of policy lapse in Bangladesh is one of the highest in the world. Around 60 per cent polices get lapsed after first or second year.
On the other hand, a section of agencies has been making money by using the fictitious identification numbers.
All the insurance firms made a premium earning of Tk 69.13 billion in 2014.
Of the turnover amount, they fetched Tk 16.28 billion as first-year premiums. The remaining Tk52.84 billion came from renewal earnings for the second year and above.
According to the IDRA, the total commissions given to the agents amounted to nearly Tk 9.0 billion in the past calendar year.
Since most of the agents do exist only on paper a large amount given as commission goes to field-level agencies and 'others', the IDRA officials said.
To test whether the agents are fakes or not, the IDRA summoned all life insurers to send their agents to its headquarters in the city but got little response.
The IDRA later extended time from January to February upon request from the insurers' association - Bangladesh Insurance Association. But, again, the reposes were lukewarm.
"Most of the agents are fakes, and this is affecting both the company in particular and the industry in general," said Chairman of the IDRA M Shefaque Ahmed.
He said a section of agencies have been doing the foul play for long.
He hinted that the Authority is mulling over how to tackle it and ensure good number of agents under the employers.
According to relevant rules, he noted, each employer will have to hire at least five agents.
Excepting the US-based Metlife, all local life firms have around two agents, instead of five.
Currently, there are 221,617 agencies (main agents) and they have hired only 116,821 agents.
The IDRA chief said this figure of agents is not bona fide. And this lacuna is affecting seriously the growth of insurance business.
"It is quite impossible by limited numbers of employers of agents or agents to handle both new and old business," he said.
He pointed out tricks of the trade that the commission from new business is high and so they concentrate on new business procurement and thus cause old ones to lapse.
Contacted, Ahsanul Huq Titu, vice-chairman of the Bangladesh Insurance Association, a group of private life and non-life insurance firms, dismissed such claim as untrue.
He said many are not interested to be present physically as they earn too low to visit Dhaka.
"I cannot comment on other companies, but my company - Sandhani life - has adequate number of agents and we pay them through banks."
In the meantime, the IDRA is also suspicious about the claims of agents and employers of agents under the state-owned Jiban Bima Corporation (JBC) as it had applied to the bank and financial institutions division to exempt agents from physical presence in the IDRA for licence renewal.
In a letter to the division under the ministry of finance, JBC said keeping presence physically at the IDRA and collecting renewal licence will affect their business.
jasimharoon@yahoo.com
IDRA suspects presence of large number of fake agents
Jasim Uddin Haroon | Published: August 02, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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