The Insurance Development and Regulatory Authority (IDRA) has directed all insurance companies to improve their claims settlement rate to cent per cent.
A letter signed by IDRA Director Nazia Shirin was sent to all general and life insurance companies on Thursday. The second quarterly report (October-December, 2021) of life insurance companies for FY 2021-22 showed that the claims settlement was 70.61 per cent. The general insurance companies had settled only 38.47 per cent claims.
IDRA said the performance was not desirable. It asked insurance companies to take necessary measures to pay 100 per cent insurance claims ahead of the next National Insurance Day.
Claim settlement is a crucial element of customer satisfaction that insurers have long neglected. Life insurance companies account for about 75 per cent of the annual premiums collected by insurance companies in Bangladesh. The remaining 25 per cent belongs to general insurance companies.
The Insurance Act 2010 mandates settling claims within 90 days of maturity of the policy. If the payment is made after 90 days, an additional 5 per cent interest with the bank rate will have to be paid for the additional period.
But there are allegations that many insurance companies have ignored the clause for years. The insurance companies’ rates of settlement claims are increasing thanks to IDRA’s steps, said IDRA’s Executive Director SM Shakil Akhter.
“Most of the insurance companies resolved claims during the pandemic but some have been facing various issues because of mismanagement,” he told The Business Post.