Dr. M Aslam Alam 
The country's insurance industry is undergoing a series of reforms, aimed at ensuring best business practices in the sector for the sake of building people's trust and safeguarding policyholders' interest.
Several reform initiatives, including the ongoing amendment to the existing insurance act, have already been undertaken in recent years to strengthen the regulatory regime, address the sector's existing weaknesses as well make the insurance business time-befitting, Chairman of the Insurance Development and Regulatory Authority (IDRA) Dr. M Aslam Alam has said.
"If the planned reforms are implemented accordingly, the country's insurance penetration ratio would increase substantially," the IDRA head said in an exclusive interview with The Financial Express (FE).
Dr Alam, who is a former secretary of the Financial Institutions Division under the Finance Ministry, said the present insurance law contains numerous loopholes, which must be addressed.
The proposed amendment to the existing insurance law will ensure better practices in dealing with insurance claims and help insurers comply with specified timelines and procedures, he observed.
According to Dr Alam, the country's insurance industry has been facing several impediments including low public awareness, poor claims settlement record that has eroded public trust, lack of diversified insurance products to meet the needs in the changing context, poor corporate governance, a weak regulatory regime, and absence of a digitalised insurance marketplace and distribution channels.
To cope with such challenges, the regulator has planned to promote best practices by expanding the role of actuaries for ensuring accurate risk assessments and pricing, said the IDRA Chairmen.
"The IDRA is implementing the Solvency Margin Regulation 2024, which sets progressive solvency targets for insurers to achieve by 2035", he said.
Dr Alam also pointed out that Bangladesh's insurance sector remained exposed to global business risks, particularly those originating from the United States, which accounts for about one-third of the global economy.
"Changing US tariff policies might directly impact both life and non-life insurance business in Bangladesh. For example, marine cargo insurance could be affected, as the US is a major trading partner," the IDRA chief said.
On Trump administration's recent proposal for introducing reciprocal tariffs, he said all types of risks -- both fire and industrial -- may see new dimensions because of it.
"A slowdown in economic growth and increased inflationary pressures resulting from US tariffs might affect the growth of the life insurance sector as well," he said.
High inflation has already begun to slow growth in the life insurance segment, Dr Alam acknowledged.
Usually rates of premiums are typically fixed at the time of issuance of insurance policies and they cannot be adjusted during the tenures of such policies.
However, there remains a scope for developing insurance policies in such a manner that premium and benefits can be adjusted with rate of inflation.
"There is no restriction in the current framework against creating such inflation-linked products," he observed, adding that it is the primary responsibility of insurance companies as to how they would innovate and sell the new products.
IDRA is actively considering policy reforms to facilitate the introduction of inflation-linked insurance products, offering better value protection for policyholders over the time, said the IDRA chairman.
About the longstanding problems with regard to delayed or non-settlement of insurance claims, Dr Alam said IDRA is undertaking several measures to address such issues with a view to rebuilding people's trust.
The measures include strengthening monitoring and supervision, and motivating board members and CEOs of insurance companies for protecting policyholders' interest.
He said implementation of the Policyholder Protection Guidelines, 2023 would help strengthen the regulatory regime, safeguarding policyholders' rights, ensuring the compliance in claims settlement and dispute resolution processes.
About the Solvency Margin Regulation 2024, the IDRA chairman expressed his hope that the new regulations would help insurance companies maintain sufficient fund for duly settlement of insurance claims, thus contributing to greater financial stability across the industry.
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