Justice Corner BD
Insurance plays a crucial role in securing investments and mitigating financial risks, making it an essential aspect of business and economic development. In Bangladesh, the insurance sector is governed by a robust legal framework to ensure regulatory compliance, consumer protection, and industry growth.
Legal Framework Governing Insurance in Bangladesh
The insurance industry in Bangladesh is primarily regulated by the Insurance Act 2010, Insurance Development and Regulatory Act 2010, and Insurance Corporations Act 2019. The Insurance Development and Regulatory Authority (IDRA) serves as the key regulatory body overseeing all insurance and reinsurance activities, ensuring market stability and fair business practices.
Types of Insurance in Bangladesh
Insurance companies in Bangladesh offer five main types of coverage:
- Life Insurance – Provides financial protection for policyholders and their beneficiaries.
- General Insurance – Covers risks related to property, health, and liability.
- Reinsurance – A risk management tool allowing insurers to transfer part of their liability to other insurers.
- Micro-insurance – Designed for low-income individuals and small businesses.
- Islami Insurance – Operates under Islamic finance principles.
Reinsurance and Its Legal Implications
Reinsurance allows insurers to minimize financial exposure by sharing risks with other insurers. Under the Insurance Corporations Act 2019, at least 50% of general insurance reinsurance business must be placed with Sadharan Bima Corporation (SBC), the state-owned insurer, while the remaining 50% can be placed with local or foreign reinsurers. Life insurance, however, may be reinsured internationally.
Regulations on Foreign Insurance Policies
Bangladeshi law restricts individuals and businesses from purchasing insurance from foreign insurers without IDRA approval. This regulation ensures that insurance businesses operate within Bangladesh’s financial and legal system, providing stability to the local market.
Dispute Resolution in Insurance Matters
Bangladesh provides multiple avenues for resolving insurance-related disputes:
- Court Litigation – Beneficiaries can file cases in Bangladeshi courts if they face issues with claims, policy terms, or payments.
- Alternative Dispute Resolution (ADR) – For small claims, disputes can be settled through IDRA, whose decisions are binding and final.
Conclusion
With a structured regulatory system, the government ensures the protection of policyholders and stability in the insurance sector. While foreign insurance policies require approval, the reinsurance sector remains open to international cooperation. The availability of dispute resolution mechanisms further strengthens the rights of beneficiaries, fostering trust and reliability in the industry.
