Life insurance is meant to guarantee financial security against death, illness, or old age. Millions of Bangladeshis have paid premiums month after month for years, trusting insurers to protect their families when it matters most. Instead, that promise has collapsed into a prolonged crisis marked by fraud, empty funds, and endless waiting.
Despite paying premiums for decades, many policyholders today are unable to collect death claims, maturity benefits, or surrender values. In some cases, claims have been pending for five to ten years or more.
According to the Insurance Development and Regulatory Authority (Idra)’s September 2025 quarterly report, the life funds of at least seven life insurance companies have fallen to zero or gone negative. Yet these companies collectively owe more than Tk4,000 crore to around 1.3 million customers.
Life funds are meant to be ring-fenced pools of money used solely to pay policyholder claims. When these funds are exhausted, insurers are effectively unable to honor their obligations. Idra’s report reveals that while the combined life fund of the country’s 36 life insurers stands at around Tk36,000 crore, several companies have completely depleted their funds through mismanagement and fund diversion.
Idra officials say customer dues must be paid from the life fund. However, the life funds of nine companies are now critically fragile, with seven holding no money at all. In some cases, the funds have slipped into debt after being siphoned off by owners and management. As a result, customers of these companies are left with no clear path to recovery.
Fareast Islamic Life: ground zero of the crisis
Among the seven, Fareast Islamic Life Insurance—owned by Beximco Group—is in the worst condition. According to Idra data, Tk453.15 crore has been withdrawn or embezzled from its life fund, leaving it completely empty.
Acting CEO Md Abdur Rahim Bhuiyan told Dhaka Tribune that the company’s financial collapse was caused by withdrawals made by the previous owners, directly crippling its ability to pay claims. Since 2021, Fareast has been unable to settle large claims and is only paying small amounts “within limited capacity.”
At the time the alleged embezzlement occurred, a long list of former directors and senior executives were simultaneously involved in the board and management, raising serious governance concerns.
The impact on customers has been devastating. According to Idra, Fareast has 161,000 customers with claims worth Tk2,780 crore pending—nearly all of its total claims. Only about Tk349.5 crore has been paid so far, leaving a claim settlement rate close to zero.
Other insurers with empty funds
Padma Islami Life Insurance, owned by S Alam Group, ranks second. Its life fund is also empty after Tk306 crore was spent elsewhere. CEO Abu Musa Siddiqui admitted the fund is negative but blamed the crisis primarily on liquidity shortages rather than asset insufficiency.
He said Padma Life owns assets worth around Tk400 crore, but poor market conditions have made them difficult to sell. In the meantime, premium collections are being used to pay claims. He expressed hope that conditions would improve after the elections.
Baira Life Insurance has no money in its life fund either, with an additional Tk65 crore reportedly withdrawn. Newly appointed CEO Noor Mohammad Bhuiyan said the company’s branches had remained closed for years before his appointment, pushing the fund into deficit. He outlined a recovery plan involving automation, cost-cutting, and new products for expatriate Bangladeshis, but acknowledged stabilization would take time.
Shanta Life Insurance, a newer entrant, has also slipped into the zero-fund list after diverting Tk10.92 crore. CEO Nafis Akhtar Ahmed said negative life funds are not unusual in the early years of new companies and promised corrective measures.
Swadesh Life Insurance transferred Tk5.11 crore from its fund. CEO AK Kawsar said the company was already financially weak when he joined and is now seeking fresh paid-up capital from owners to address the crisis.
Protective Islamic Life Insurance and Jamuna Life Insurance also have negative life funds. Jamuna CEO Ajit Chandra Aich admitted that a negative fund makes it impossible to fully protect customer interests.
An Idra official, speaking anonymously, said: “Zero life fund means the company is practically bankrupt. But Idra does not have the authority to cancel licenses or take strong punitive action.”
Claims pile up across the sector
The crisis extends beyond these seven firms. Idra data shows that by September, total life insurance claims stood at Tk5,986 crore, of which Tk3,880.58 crore remained unsettled. Alarmingly, nearly 88% of unpaid claims—about Tk3,426 crore—are concentrated in just five companies.
Fareast Islamic Life tops the list with Tk2,780 crore unpaid out of Tk2,815 crore in total claims. Padma Islami Life follows, with almost all of its Tk25.74 crore claims outstanding. Sunflower Life Insurance, Progressive Life Insurance, and even the state-owned Life Insurance Corporation also have large volumes of unpaid claims.
A former life insurance CEO said most companies are not settling claims within the legally mandated 90 days. “Even companies considered ‘good’ are exploiting the deadline. Many others are running a grand scam,” he said.
Customers trapped in endless waiting
For policyholders, the experience is one of exhaustion and despair. Claims are frequently returned for “incomplete documents,” forcing customers into repeated visits and submissions.
Yousuf Ali Mia from Pabna, a Progressive Life customer, said his policy matured in 2021 but remains unpaid. “Just harassment. There is no willingness to pay,” he said. Progressive’s Pabna office has since closed, forcing customers to travel to Dhaka.
Idra data shows Progressive Life has Tk153 crore in expired claims against a life fund of only Tk79 crore. Chairman Bazlur Rashid admitted financial damage caused by previous board members but said the company is trying to pay “as much as we can.”
Many branch offices exist only on paper. In Pabna, Progressive’s office is locked, yet premium collection through agents continues. Agents report facing social pressure and threats from angry customers.
Rafiqul Islam, whose policy matured in 2022, said he was given a post-dated cheque valid after six months. “Cheque dishonour has become another name for insurance fraud,” he said.
Cheques that bounce, hope that fades
In Meherpur, customers of Sunlife Insurance received cheques that were later dishonoured due to insufficient funds. Advocate Saiful Islam sent a legal notice in July 2024, calling the practice fraudulent. The notice details bounced cheques issued to 22 customers and was also sent to Idra.
According to Saiful Islam, only customers who filed cases have managed to recover their money.
‘Insurance means fraud to me’
Fareast Islamic Life was once considered reliable. Abu Yusuf of Sylhet bought a 10-year policy in 2009 and paid Tk337,200. His policy matured in 2018, but six years later, he still has not received a single taka.
“Fareast Life has ruined my life. Now insurance means fraud to me,” he said.
Abu Hena from Rangpur has waited seven years for a death claim after his wife died in 2018. “They only say the file is being processed,” he said.
Protests have erupted as branch offices closed and officials fled. In Rangpur, customers once detained trucks and staff after officials disappeared overnight without paying claims. Today, police guard Fareast’s head office to keep angry policyholders out.
Waiting for decades
Some customers have been waiting more than a decade. Asma Akhtar of Rangpur has not received payment for a policy that matured 16 years ago.
Idra admits Fareast can no longer pay claims. Baira Life customers face a similar fate, with some waiting 12 years after maturity. Idra officials say Baira currently has no funds to pay customers.
Idra deputy director Md Solaiman said the regulator’s priority is claim settlement and that asset sales may be used if necessary. But for hundreds of thousands of policyholders, the wait continues—without timelines, assurances, or accountability.