Insurance Development and Regulatory Authority (Idra) is looking to crack down on data manipulation as part of its broader drive to protect policyholders.
Speaking at a two-day residential workshop organized by the Insurance Reporters' Forum (IRF) at the Bangladesh Academy for Rural Development (BARD), Comilla, the chief of the insurance regulatory authority Mir Nadia Nivin, cited its reform agenda, at the core of which are forensic technical audits of insurers' information systems.
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.
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?
SM 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.
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.
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 standardized, 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, prioritized timelines and appropriate technical infrastructure.
Policyholders remain the immediate test
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.
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.
Industry representatives have also warned that domestic regulatory reform cannot be separated from the sector's access to international reinsurance.
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.
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.