The insurance regulator has launched a major compliance drive by inspecting nine non-life insurers over allegations that they continued paying commissions and other financial incentives despite suspension.
The move comes amid growing concerns that some general insurers have been circumventing regulatory directives by offering commission-like benefits under different names to attract and retain business, which, industry insiders say, is creating uneven competition.
According to a press release issued by the Insurance Development and Regulatory Authority (IDRA) on Tuesday, three separate inspection teams formed on June 4 have started examining the operations of the insurers to verify compliance with existing laws, regulations and regulatory directives.
The companies that came under regulatory scrutiny are Pragati Insurance, Paramount Insurance, Bangladesh National Insurance Company, Crystal Insurance, Asia Pacific General Insurance, Union Insurance, Global Insurance, Karnaphuli Insurance and Prime Islami Insurance.
The latest inspections are a follow-up on a major policy decision taken by IDRA in December last year when it abolished the provision of paying commissions and suspended all individual agent licences in the non-life insurance sector, with effect from January 1 this year.
The decision was taken, acting on a request by the Bangladesh Insurance Association (BIA) and with the consent of insurance companies. It was aimed at protecting policyholders' interests, strengthening insurers' financial health and restoring discipline in the insurance sector.
Despite the suspension of agency operations, allegations have arisen that several insurers continued to provide financial incentives to intermediaries and business generators through various arrangements, including salaries, allowances, service charges and so-called "no-claim bonuses."
In response to the complaints, the insurance regulator formed inspection teams to look into the accusations and assess whether the companies are complying with applicable laws, regulations and directives.
Sources familiar with the inspection process said the teams were reviewing company records and payment-related documents to determine whether any benefits had been provided in violation of regulatory instructions.
The inspectors will also examine whether payments categorised under alternative heads were in fact linked to business procurement activities.
According to the IDRA, the probe findings will be submitted to IDRA's vigilance team for further review. If evidence of irregularities is found, the regulator may initiate action under the Insurance Act and relevant regulations.
IDRA Member (General Insurance) Mohammad Abu Bakar Siddique said the inspections were intended to verify compliance with the regulator's directives and ensure that all market participants operated under the same rules.
The insurance regulator, he added, remains committed to strengthening governance, promoting fair competition and ensuring the effective implementation of its decisions.
The inspections are widely viewed as one of the most significant enforcement initiatives undertaken by the regulator since the abolition of commissions in the non-life insurance sector.
Market analysts say the move sends a strong signal that the regulator is prepared to adopt a tougher stance against non-compliance.
"The initiative could help improve transparency and accountability in the insurance sector at a time when regulators are seeking to enhance confidence in the country's financial market," said Akramul Alam, head of research at Royal Capital.
He also said the regulatory move reflects IDRA's increasing focus on enforcement after years of complaints over aggressive competition, undercutting and irregular commission practices in the non-life insurance sector.
Commission-related competition has long been one of the key challenges facing the industry. In many cases, insurers have competed for business by offering high commissions or incentives, often eroding underwriting standards and affecting profitability.
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