Posted On: 02-04-2025
Insurers Breach Commission Limits in Market Share Battle
In an aggressive push to capture a larger share of the insurance market, several insurers in Bangladesh have exceeded the legally mandated commission limits set by the Insurance Development and Regulatory Authority (IDRA). This violation, driven by fierce competition, raises concerns about financial stability and regulatory enforcement.
According to recent industry reports, some insurers have been offering commissions as high as 25-30% to agents and brokers—well above the permitted 15% ceiling. This excessive spending on commissions is aimed at attracting more policyholders, but it also threatens the profitability and liquidity of these companies.
Why It Matters
1. Regulatory Violations: IDRA mandates commission caps to maintain financial discipline in the sector. Exceeding these limits distorts fair competition and can lead to unsustainable business practices.
2. Financial Risk: Higher commissions eat into insurers' reserves, potentially leading to delayed claim settlements and liquidity crises.
3. Market Instability: The practice puts pressure on compliant insurers, forcing them to follow suit or risk losing market share.
The IDRA has intensified its scrutiny of commission structures and warned insurers against such breaches. Industry insiders suggest that penalties, including fines and license suspensions, could be imposed on non-compliant firms.
Bangladesh’s insurance sector has been growing steadily, with premium collections rising by approximately 12% in 2023. However, unchecked commission hikes could undermine this progress by eroding investor confidence and leading to financial instability.
For a sustainable future, insurers must balance competitive strategies with regulatory compliance. Instead of exceeding commission limits, companies should focus on improving service quality, digital innovations, and customer engagement to drive growth.
Do you think stricter penalties should be imposed on insurers violating commission limits? Share your thoughts in the comments! #Insurance #Regulations #MarketShare #Bangladesh