Written by The Banking Post
Bangladesh’s insurance regulator has formally abolished agent licences in the non-life insurance sector, enforcing a ban on agent commissions from this month and effectively removing agents from premium collection.
The Insurance Development and Regulatory Authority confirmed the decision on Wednesday and notified all stakeholders. As a result, none of the country’s 45 non-life insurance companies will be allowed to deploy agents or pay commissions. Any breach of the directive will attract punitive action, the regulator said in a statement.
The move targets long-standing problems in the non-life segment, where aggressive commission payments have distorted pricing and weakened underwriting discipline. Studies by insurers, independent researchers and the regulator found that companies routinely paid uncontrolled commissions to compete in a relatively small market, a practice widely blamed for poor claim settlements.
In 2023, non-life insurers in Bangladesh settled only 35.54 per cent of total claims. The sector also lags far behind life insurance in premium collection. While life insurers collected Tk 123 billion in premiums that year, non-life insurers collected just Tk 60 billion.
This imbalance contrasts sharply with global trends. Worldwide, non-life insurance dominates the industry, accounting for 59.80 per cent of total premiums in 2023, compared with 40.20 per cent for life insurance, according to the regulator’s latest annual report.
Industry insiders say commission-driven growth encouraged insurers to prioritise premium volume over risk assessment, leading to weak underwriting and delayed claims. High commissions also fuelled unhealthy discounting, eroding the sector’s financial discipline.
The regulator’s decision marks one of the most significant structural reforms in recent years. While the transition may be difficult for companies heavily reliant on commission-based business, the overhaul is expected to steer the non-life insurance market towards more disciplined operations, sustainable growth and stronger protection for policyholders.
