Insurance cos sucking public money

Not settling claims

Zarif Mahmud: Rickshwa puller Md. Jewel Hossainbought an insurance policy from a life insurance company with the money earned through hard work. After the expiry of the insurance policy with monthly premium of Tk 100, he has to face many difficulties to get the money deposited. To get the insurance money, they staged rushing for months in different quarters. After going door to door for a long time, he got the insurance money. However, due to non-deposit of regular insurance policy, this customer received only Tk 2,532 at the end of the term. He had to wait for almost two years to withdraw this little money.
Jewel Hossain, a resident of Maheshpur upazila of Jhenaidah district told, I save the money I earn by driving the van and insure it little by little. I did not pay the insurance premium due to lack of money. I have been searching for almost two years through the insurance company to get back the money I deposited. But nothing was happening. After contacting the company through various channels, I recently received a check of Tk 2,532. But I have deposited more money than this to the insurance company. Apart from this, another one and a half thousand rupees have been spent while communicating through various channels.
Like Jewel, Alamgir Hossain suffered many hardships to get the insurance money. This insurance customer also buys an insurance policy with a monthly premium of Tk 100. After protesting in various quarters for almost a year, he recently received a check of Tk 12 thousand from the insurance company.
Alamgir Hossain said, I am insuring the company with money earned through bloodshed. The agent of the company speaks very well while selling the policy. There is also hope that double money will be available at the end of the term. But the real picture is very difficult. I had to go through a lot of trouble to get the insurance money back at the end of the term.
He said, I have been following the people of the insurance company for months, but to no avail. At one point I contacted a local journalist in Dhaka. After he spoke to the company a few times, he got the insurance money back. Although I get money, many people in my area are not getting money even after the term. Our hard-earned money is being grabbed by insurance companies. Many people in our area once had insurance. No one wants to insure now.
Expatriate Faisal Khan could not collect the insurance claim even though he got the insurance money by burning various pieces of wood from Jewel or Alamgir. While in Bangladesh, Faisal purchased an insurance policy from Padma Islami Life Insurance in his mother’s name. The insurance policy expired about two years ago.
In a Facebook post from America in February of this year, Faisal Khan wrote, “On December 28, he came from behind on the highway and killed him. Immediately the police and fire service came and gave a report. I had a little pain in my left hand and neck, Alhamdulillah I am fine now. After three days of making a claim to the insurance company of the car that hit me (between Saturday and Sunday), they hired a car for me to travel.’
“In the meantime, they took my car and made a repair estimate and found that the repair cost was more than the market value of the car. In total 27 days after the accident, they paid the current market value of my car by check. On the other hand, the documents have been submitted to the office after the expiry of my mother’s life insurance (Padma Islami Life Insurance). But still haven’t received the money. I don’t even know when I will get it or not.
Almost three months have passed since Faisal Khan posted this on Facebook. He has not yet received the insurance money despite contacting through various channels. Another expatriate Mohammad Haroon-or-Rashid is not getting insurance money like him. The customer who took insurance policy from Far East Islami Life returned home a few months ago. On September 24 last year, he applied to the company for an urgent insurance claim. But still haven’t received the money.
Not just Faisal Khan or Haroon-or-Rashid, thousands of customers who have deposited their hard-earned money with insurance companies for years are not getting that money back at the end of the term. The picture of insurance customers not getting the claim money properly has also emerged in the report of the regulatory body Insurance Development and Regulatory Authority (IDRA). IDRA has recently sent a report to the finance ministry about the picture of payment of insurance companies’ claims. The information of the period from July 2023 to March of this year has been presented in that report.
According to the report, the private sector life and general insurance companies doing business in the country paid only 34.93 percent of insurance claims. Among them, the claim payment rate of life insurance companies is 40.46 percent and the claim payment rate of general insurance companies is 16.70 percent. In contrast, the claim payment rate in state-owned insurance companies is 45.55 percent. Among them, the claim payment rate of Jibon Bima Corporation is 62.58 percent. And the claim payment rate of Jibon Bima Corporation is 30.81 percent.
At the end of March this year, the total amount of insurance claims raised by surplus and new insurance companies stood at Tk 21,601 crore 39 lakh 5 thousand 839. Out of this, the companies have paid Tk 7698 crore 44 lakh 70 thousand 50. That is, the insurance companies have not paid the claims of Tk 13 thousand 902 crores 94 lakhs 35 thousand 789 of the customers. The rate of non-payment of this claim is 64.36 percent.
From this report it is clear that the companies are not paying the majority of the insurance claims of the customers. But the sector concerned says that the claim payment rate in insurance companies should be at least 80 percent. If the claim settlement rate is less than this, it is not a good sign. This sector will lose people’s confidence if the customers do not get the insurance claim money. In the meantime, common people’s distrust towards insurance has been created. If this situation continues, it will be difficult for insurance companies to get customers.
A review of the IDRA report sent to the Ministry of Finance showed that the total claims raised in the Sadharan Bima Corporation in the first 9 months of the fiscal year 2023-24, together with surplus and new claims, amounted to Tk 774 crore 41 lakh 84 thousand 943. Out of this, the company has paid Tk 238 crore 63 lakh 31 thousand 425. That is, the claim payment rate is only 30.81 percent.
Another state-owned company, Jibon Bima Corporation, has paid Tk 419 crore 40 lakh 93 thousand against the claim of Tk 670 crore 19 lakh 7 thousand 216. The claim payment rate of this company is 62.58 percent.
Surplus and new total claims raised in two state-owned institutions are Tk 1,444 crore 60 lakh 92 thousand 159. On the contrary, the claim was paid Tk 658 crore 4 lakh 24 thousand 808. In other words, 54.45 percent of claims are outstanding in state-owned enterprises.
On the other hand, in private life and general insurance companies, surplus and new insurance claims of Tk 20 thousand 156 crore 78 lakh 13 thousand 680 were raised. Tk 7 thousand 40 crore 40 lakh 45 thousand 242 has been paid out of this. That is, the insurance claim outstanding is Tk 13,116 crore 37 lakh 68 thousand 438. As such, 65.7 percent of insurance claims have not been paid by private insurance companies.
According to the report, private life insurance companies have paid Tk 6,256 crore 29 lakh 72 thousand 117 against the claims of Tk 15,462.70 crore to customers. Claim payment rate is 40.46 percent. On the contrary, private life insurance companies have not paid Tk 9,206 crore 41 lakh 3 thousand 106 or 59.54 percent of insurance claims to customers.
On the other hand, private general insurance companies have paid only Tk 784 crore 10 lakh 73 thousand 125 against the claim of Tk 4,694 crore 7 lakh 38 thousand 457. That is, Tk 3,909 crores 96 lakhs 65 thousand 332 owed by customers have not been paid. The rate of non-payment of this claim is 83.30 percent.
That is, general insurance companies could not pay claims at the same rate that life insurance companies paid their claims. Again, in the report the claim payment rate of the life insurance companies is slightly higher but overall, it is not satisfactory at all. Even the officials of the regulatory agency IDRA are expressing dissatisfaction with this rate of payment of claims.
In this regard, the spokesperson of IDRA Jahangir Alam told that overall insurance companies have a claim settlement rate of 40 percent. We are not satisfied with it at all. We want insurance companies to pay 100% claims. I am working towards this goal.
Pragati Life’s Chief Executive Officer (CEO) Jalalul Azimsaid whether the claim payment rate of insurance companies is 40-45 percent is satisfactory. The claim settlement rate should be above 80 percent.
He said, Fareast Islami Life Insurance is a big company as far as I know. Their claim payment rate is now almost zero. There are some larger such companies, if their claims payout rates go down, it will shock the entire insurance sector. It happened. Now several companies are not able to pay the money demanded by the customers. Because of this, the entire insurance sector is suffering.