Padma Islami Life Insurance is going to sell its 20-decimal land in Comilla for Tk 19 million to settle claims as the sector watchdog has intensified efforts to bring discipline in the claim settlement process.
It has the second-lowest claim settlement ratio in the country after BAIRA Life Insurance, according to the latest data of the Insurance Development and Regulatory Authority (IDRA).
The life insurer's claim settlement ratio was just 9.36 per cent in 2023 whereas the industry average was 72.34 per cent. The company's performance had gone from bad to worse in the four years to 2023.
People have lost trust in the sector because of the declining claim settlement ratio of insurance companies amid scams and financial irregularities.
Against the backdrop of a large number of unsettled claims, IDRA has geared up for actions to improve the situation.
Industry experts insist that for companies unable to meet their payment obligations, IDRA should seize and liquidate their assets to compensate policyholders. In cases where firms lack sufficient assets, legal action against owners has been recommended to ensure policyholders receive their rightful claims.
Experts also suggest that companies struggling with liabilities should be restricted from issuing new policies or acquiring additional policyholders, as this could further strain their finances and increase the risk of public fund mismanagement.
According to a filing on Monday, Padma Islami Life Insurance announced that its board of directors in a meeting in January decided to sell the land to settle outstanding claims. IDRA approved the decision this month.
The property, located in Batabaria Mouza, Sadar Police Station, Cumilla district, will be sold for Tk 19 million.
Following the announcement, the company's share price dropped by Tk 0.4 to Tk 25 per share on the Dhaka Stock Exchange (DSE).
Padma Islami Life Insurance has been a weak performer in the market, having paid only a 2 per cent cash dividend for 2021 in the past seven years.
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