When life insurance creates hassles for clients

Highlights 

• Over 33 life insurance companies, 1 crore clients in the country 
• Many clients have to regularly pursue company agents to get their money back once their policies mature  
• Majority of allegations of delayed payment are against 6 companies
• Clients of large companies also facing similar problems 

Md Nazim Uddin of Noakhali bought a 10-year life insurance policy from Sunflower Life Insurance Company. 

His policy matured in November 2018. After that, he claimed Tk70,000 by submitting the required documents, but has not received the money yet.

Nazim's case is not unique as thousands of clients of different life insurance companies do not get their money back after their policies mature. 

Although the companies are obliged to pay claim money within 90 days of a policy maturing – as per the Insurance Act 2010 – the insured say they often have to run after company agents, month after month, to get their money back. 

"After much effort, I received a cheque from the company last year. But the cheque was dishonoured as the company's account was empty," said Nazim, who works at a pharmaceutical firm.  

"I have already submitted the cheque to the company's local office. Although there is an option to file a case against the company, I did not do that as it would be a new hassle for me," he added. 

He mentioned that the local agent assured him that he had paid him the money after receiving the dishonoured cheque. 

There are over 33 life insurance companies in the country and around one crore people are their clients, according to the Insurance Development and Regulatory Authority (IDRA). 

There are similar allegations of dishonoured claims against large companies as well. Belayet Hossain, a migrant in the United Arab Emirates who is from Feni, deposited all instalments of a decade-long policy bought from Fareast Islami Life Insurance Company.  

"My husband should have received the money amounting to Tk78,000 by April last year. When we contacted the local office, they said the money would be disbursed soon," said Belayets' wife. 

"People buy life insurance to ease their lives, but doing so is now increasing their stress," she added. 

Majority of complaints against six companies

Md Shah Alam, director (life division) of IDRA, said around 70-80% of the complaints about unpaid claims they had received were against six insurers: Padma, Sunflower, Sunlife, Baira, Homeland, and Golden Life. 

He said they have received around 10,000 complaints against Padma Islami Life Insurance and around 600 against the Homeland Life Insurance Company. 

"We resolved around 6,000 complaints against Padma after consulting with them. But the complaints we received do not reflect the real scenario of unpaid claims because the people in remote areas do not know how to file complaints," he explained. 

Alam said there are also examples of clients filing cases and complaining to the Anti-Corruption Commission against the companies.  

Another IDRA official said they had appointed an administrator to Baira Life Insurance Company to address the irregularities based on clients' complaints. 

"Homeland Life Insurance is paying their clients gradually by selling property. As for large companies, like Fareast, sometimes their local agents deceive clients by not depositing instalments," the official added.

Bangladesh Insurance Academy does research on different issues related to insurance. SM Ibrahim Hossain, chief faculty member of the academy, said, "Recently, the number of such complaints is rising against large and solvent companies. But we have no data on how many clients are facing such problems."

Wishing anonymity, a local agent of Sunflower Life Insurance in Feni told The Business Standard, "Around 25 clients of mine have not received their money even though one to three years have passed since their policies matured. The authorities said they have a funding crisis now. But as an agent, I have been facing pressure from clients." 

IDRA has received evidence of Sunlife Insurance Company harassing clients by not paying their money back. According to its investigation team, the policies of many of these clients matured between 2013 and 2018.

The probe body believes the company failed to pay the clients due to overspending. They said in the investigation report that the company had spent an additional Tk189.77 crore between 2010 and 2019. 

This means the company spent more than it could afford to run the business as per the law, and 90% of the extra money came from clients' deposits, they added. 

Insurance association wants stern action 

Sheikh Kabir Hossain, chairman of the Bangladesh Insurance Association, said they had learned that many policyholders were not getting their money back even though one to three years had elapsed since their policies matured. 

"It is a crime," he said.

"Further, it is a matter of regret for the insurance sector," he added. 

Kabir said they asked IDRA to take strict action against the companies that were not paying clients' money. 

"We also get some complaints from clients but not many. We wrote to all companies, asking them to pay their clients on time," he continued. 

The insurance association chairman described insurance money as a human deposit. 

"If a company does not have the money to pay its clients, it should get it by selling assets," he added. 

Md Farid Hossain, senior vice-president of Fareast Islami Life Insurance Company, said they were paying most of their clients. 

He said payments had recently been delayed by two to three months due to the Covid-19 pandemic.

"Sometimes, local agents make the process lengthy as they take a long time to send the required documents, which is another reason for delayed payments. We paid around Tk850 crore last year," he added.