Pvt insurers paid 83pc claims

Sadharan Bima Corporation paid only 19 pc

Zarif Mahmud: Private sector life and non-life insurance companies in the country have paid 83 percent of insurance claims in the financial year 2022-23 (from July 2022 to June this year). In contrast, the claims payout rate of state-owned insurance companies is 43 percent. Out of this, the claim payment rate of Jibon Bima Corporation is 89 percent and that of SadharanBima Corporation is only 19 percent.
Such information has been found in a report prepared by the Insurance Development and Regulatory Authority (IDRA), the insurance sector’s regulatory body on claims settlement. Recently, IDRA has sent this report to the Financial Institutions Department of the Ministry of Finance.
The review of that report shows that the total claims raised in the Sadharan Bima Corporation (SBC) in the fiscal year 2022-23 with surplus and new claims is Tk 1,115.21 crores. Out of this, the company has paid Tk 209.96 crore. That is, the claim payment rate is only 19 percent.
According to company officials, the claim settlement rate is so low because the SBC follows several processes to settle claims. However, claims are paid quickly if proper documentation is available. The payout rate for properly documented claims is over 90 percent. But many times, the proper documentation is not available, due to which the overall claim payout rate is low.
Meanwhile, another state-owned company Jibon Bima Corporation (JBC) has paid Tk 519.94 crore against the demand of Tk 585.05 crore to the customers. The claim payment rate of this company is 89 percent.
A total of Tk 1,700.27 crore was raised in two state-owned institutions. On the contrary, the claim has been paid Tk 729.89 crore. In other words, Tk 970.37 crore or 57 percent of claims are outstanding in state-owned institutions.
Apart from Baira Life and Far East Islami Life, the rest of the private life and non-life insurance companies have Tk 1,683.51 crore insurance claims outstanding. According to this, in the financial year 2022-23, the total insurance claim outstanding in government and private insurance companies is Tk 2,653.89 crore. That is, more than half of the outstanding insurance claims are from the two state-owned insurance companies.
According to the report, in the financial year 2022-23, government and private insurance companies have paid claims of Tk 8,975.81 crore to customers. Out of this, the private life insurance companies have paid Tk 7,349.45 crore against the claim of Tk 8,064.31 crore. The claim payment rate is 91 percent.
On the other hand, the non-life insurance companies have paid Tk 896.45 crore against the claim of Tk 1,865.11 crore. Claim payment rate is 48 percent.
That is, general insurance companies could not pay claims at the same rate that life insurance companies paid their claims. Again, the report shows that the claim payment rate of private life insurance companies is 91 percent, but the question is whether it is correct or not. Even the officials of the regulatory agency IDRA are questioning the correctness of this rate of claim payment.
In this regard, the spokesperson of IDRA said. Jahangir Alam told Daily Industry that according to the information provided by the private life insurance companies, the claim payment rate is 91 percent. But we have many complaints of non-payment of claims from customers. So, the accuracy of this information is questionable. We will look into the matter.
When asked about the reason for the lower claim payment rate of general insurance companies compared to life insurance companies, he said, “The authorities are taking various steps to ensure that the companies pay the customers’ claims correctly. The fact that general insurance companies have a lower claim payout rate than life insurance will be looked at as a loss and necessary steps will be taken to ensure that the customers get the claim money.”
General Manager (GM) of Claims Department SM Shah Alam told, “SBC is a government institution. There is a government rule, there is a committee, they have to take their opinion. GMs have the financial power to sanction up to Tk 50,000. More than that goes to MD. The financial power of the MD is up to Tk 10 lakh.
If it is more than that, it goes to the board, it goes to the committee. We have maybe one board meeting a month, two at most. So, if there is a quarry in the meeting, that quarry flaps and goes back to a board meeting. Still, we try our best to pay the claim in the shortest possible time,” said Shah Alam.
He said, “There is a delay in getting the documents. If the documents are not received, the claim cannot be paid. Moreover, the Prime Minister also asked to verify the correctness in the payment of claims. No claim should be made out of accuracy. We have to see it too. Due to this, claim settlement takes a little longer. However, after receiving the documents, our claim payment rate is above 90 percent. The main reason why our claim is pending is not getting proper paperwork.”
As compared to private life insurance companies, Meghna Insurance Chief Executive Officer (CEO) Mohammad Abu Bakkar Siddique told Jago News that the claim settlement rate of general insurance companies is lower because the third party is not much involved in the settlement of claims of life insurance companies. But third parties play a major role in paying claims for general insurance companies. When a claim is raised with a general insurance company, the survey report is required to settle the claim. If there is a fire again, a fire report is required. Again in case of re-insurance, the approval of the re-insured company is required. Due to the many procedures followed, the claim payout rates of the general insurance companies are somewhat low.
When contacted about the overall issue, President of Bangladesh Insurance Forum and CEO of Popular Life, BM Yusuf Ali told Jago News, “Regulatory agency IDRA has taken several steps in the payment of insurance claims. We can see the reflection. Claim payment rates are increasing. Despite problems with a few insurance companies, the claim settlement rate of private life insurance companies is 91 percent. It is satisfactory. But I think the insurance claim should be paid 100%.’