Consumer protection committee must for insurers

Every insurance company must have consumer protection and complaint settlement committees comprised of those on the board of directors, according to the draft insurance policyholder protection guidelines.

The committees will ensure the settlement of complaints related to insurance claims and take effective measures to protect the interests of policyholders, as per the guidelines.

The Insurance Development and Regulatory Authority (IDRA) published the guidelines on its website on December 17, seeking feedback from stakeholders.

IDRA has started working on the guidelines at a time when payments against claims of around 10 lakh policyholders are hanging in the balance as 29 life insurance companies are not clearing dues owing to a liquidity crisis.

The unsettled claims involve Tk 3,050 crore in the four years to the second quarter of 2023, data from IDRA showed.

Currently, there are 35 life insurance and 46 non-life insurance companies in Bangladesh.

The ratio of the premium collected by insurance companies to GDP is only 0.4 percent in the country whereas it is more than 4 percent in India, according to recent data from Switzerland-based research organisation Swiss Re Institute.

As per the guidelines, the insurance plan or product must be approved by IDRA and sales cannot be made without the approval.

It also warned against fraud.

At the sales stage, the actual benefits and conditions of the proposed product should be clearly informed to the customer in understandable and simple language, according to the guidelines.

No idea or assurance shall be given to the customer, verbally, in writing or otherwise, which is not in the insurance plan, it said.

It also mentioned that the suitable insurance plan or product must be presented to the customer in the context of the customer's needs or demands. No such insurance scheme or product shall be affected or forcibly sold to customers which the customer did not intend to purchase.

Customers should also be informed of any restrictions or penalties in case of policy maturity or withdrawal and any investment or other risks associated with insurance policies.

In line with the guidelines, no changes can be made to the insurance contract without the written consent of the insured.

An insurer or agent or the broker or agent appointee shall ensure appropriate security measures to preserve sensitive customer information, it added.

An individual/insurance customer or potential customer shall not be induced to initiate an insurance policy or change, add or cancel any policy, it said.

It also instructed the insurer to create and maintain a database of all the information of the insured while ensuring effective systems and processes for receiving, registering and disposing of complaints, including ICT-based systems.

"The guidelines seem suitable and will encourage policyholders," said Nasir Uddin Ahmed, first vice-president of the Bangladesh Insurance Association.

Zahangir Alam, spokesperson of IDRA, recently told The Daily Star that the settlement of many claims of policyholders remained suspended despite maturing, which was why the regulator was going to make this guideline.