The insurance regulatory authority is looking to crack down on data manipulation as part of its broader drive to protect policyholders.Subscribing To Newspapers
Speaking at a two-day residential workshop organised by the Insurance Reporters' Forum (IRF) at the Bangladesh Academy for Rural Development (BARD), Comilla, the chief of the Insurance Development and Regulatory Authority (IDRA), Mir Nadia Nivin, cited its reform agenda, at the core of which are forensic technical audits of insurers' information systems.
Ms Nivin raised concerns over the alleged use of parallel or dual servers to generate separate sets of financial information. Such practices would result in serious flaws in regulatory reporting, as the assessment of an insurer's financial health depends fundamentally on the accuracy of the information IDRA receives.Studying World History
IDRA has given insurers six weeks to eliminate the hidden systems, after which technical and forensic audits are expected to begin, alongside legal measures where violations are found.
The development, however, raises a fundamental question: how have such discrepancies remained undetected despite years of regulatory reporting and supervision?
S. M. Ziaul Hoque, a senior insurance industry expert and former chief executive of Chartered Life Insurance, said insurers had historically submitted quarterly information to IDRA. Gathering more data, he said, would not solve the problems that plague the industry; rather, the regulator needs an effective mechanism to independently verify information submitted by insurers.
Risk-based supervision and its data challenges
Meanwhile, IDRA plans to introduce Risk-Based Supervision (RBS) by December 2026, potentially marking a significant shift from conventional compliance-based supervision.
RBS would allow the regulator to focus more on insurers presenting higher risks, including deteriorating solvency, liquidity pressures, unusual investment patterns and governance weaknesses.
But reliable data are the foundation of such a system. If the underlying information is incomplete or manipulated, even sophisticated risk-monitoring systems may fail to identify emerging problems.
Ms Nivin said IDRA plans to introduce a sector-wide Unique Policy ID and Unique Cover ID system within three to four months to improve policy tracking, monitor premium inflows and prevent fraud.
The system could eventually enable regulators to follow policies from premium collection through claim settlement. Its effectiveness, however, will depend on whether insurers can integrate their existing systems with the new regulatory infrastructure and provide standardised, accurate information.
Syed Sehab Ullah Al-Manjur, chief executive of United Insurance Company Ltd, welcomed the reform direction but stressed that implementation would require clear guidelines, prioritised timelines and appropriate technical infrastructure.
Policyholders remain the immediate test
Structural reforms aside, the most immediate challenge for the regulator is the settlement of long-pending claims.
IDRA has indicated that it is moving toward a controlled mechanism for settling claims involving troubled insurers, with a First-In, First-Out (FIFO) approach intended to ensure that claimants are treated according to an established order rather than discretionary decisions.
The credibility of such a system will depend on the accuracy of the underlying claim register. The regulator would need to verify which claims are valid, when they became payable and how much money is available for distribution.
The broader issue is whether troubled insurers have sufficient realisable assets to meet their policyholder liabilities. Assets recorded on balance sheets cannot automatically be treated as immediately available cash. Real estate, for example, may require valuation, title verification and disposal, while its eventual sale price may differ from book value. This creates a critical distinction between reported assets and the cash that can actually be recovered for policyholders.
Asset recovery also raises the question of responsibility for losses. If investigations establish asset diversion, improper related-party transactions or fraudulent reporting, simply realising the remaining assets of an insurer may not be enough to protect policyholders.
Ms Nivin said IDRA is working with Bangladesh Bank, the Bangladesh Securities and Exchange Commission (BSEC) and other agencies on special audits aimed at tracing undisclosed bank accounts and assets. Such cooperation could allow regulators to reconstruct transactions that cannot be fully understood from insurance records alone.Studying World History
For policyholders, however, the real test will be whether such investigations result in recoverable funds and whether those funds reach legitimate claimants.
Reinsurance bottleneck
Industry representatives have also warned that domestic regulatory reform cannot be separated from the sector's access to international reinsurance.
Mr Al-Manjur, of United Insurance Company, said restrictions affecting foreign premium remittances were creating difficulties in confirming facultative reinsurance arrangements with overseas reinsurers. This can create large commercial risks where local insurers require international reinsurance capacity.Opening Savings Accounts
He also called for a market-friendly interpretation of compulsory cessions to state-owned Sadharan Bima Corporation to prevent administrative delays in commercial risk placement.
The challenge for regulators, therefore, is to strengthen control against financial abuse without creating unnecessary barriers for legitimate reinsurance transactions.
IDRA's proposed reforms could mark an important change in Bangladesh's insurance supervision. The reform initiative will, however, be a success only if it can help IDRA regain public trust by ensuring reliable data, detecting risks early and settling legitimate claims fairly.
