M. Hossain Ahmed, Journalist and Insurance Analyst:   For a long time, Bangladesh’s insurance sector has been plagued by various issues, including irregularities, mismanagement, weak regulation, excessive commissions, a lack of financial discipline, and delays in settling policyholders’ claims.
Commission-based business has become a deeply entrenched culture, particularly within the non-life or general insurance sector. Consequently, while the primary basis of competition among insurance companies ought to have been sound underwriting, risk assessment, product quality, customer service, and financial strength, in reality, competition has often been reduced to a question of who can offer the highest commission.Against this backdrop, the initiative by the Insurance Development and Regulatory Authority (IDRA) to set the commission for individual agents in the non-life insurance sector at zero percent is undoubtedly a significant policy shift. However, merely issuing a notification or circular will not bring about the desired change. The most critical question remains: how effectively can this decision be implemented at the field level?

The issue is not a lack of new rules, directives, or circulars in Bangladesh’s insurance sector; rather, the problem often lies in their implementation and oversight. Consequently, regarding the zero-commission policy, it is essential to establish an integrated and rigorous monitoring framework to enforce the principle that commissions must neither be paid nor received—going beyond the mere issuance of directives.

Time to move away from commission-based business

In the non-life insurance sector, commissions have long served as a primary tool for securing business. Allegations of paying commissions exceeding the limits set by the regulator are nothing new. Consequently, a company wishing to conduct business in compliance with regulations risks falling behind competitors. Eventually, such irregularities tend to become the norm.

This trend places direct pressure on the financial strength of insurance companies. If a portion of the funds intended for reserves, claim settlements, risk management, and meeting future liabilities is instead diverted toward excessive commissions or business acquisition costs, the company’s capacity to meet future obligations is naturally compromised.

The greatest impact falls on the customer. The primary objective of insurance is to provide financial security during times of crisis. However, if a customer has to wait months—or even years—after filing a claim, it is only natural for public confidence in insurance to erode.
Therefore, the move towards zero commission is not merely a decision to eliminate commissions; it represents an opportunity to transform the business culture of the insurance sector.

Implementing zero commission requires, first and foremost, an inter-institutional initiative.

Responsibility for implementing zero commission cannot rest solely with the IDRA; relevant institutions—including the Finance Division, Bangladesh Bank, the Insurance Development and Regulatory Authority (IDRA), the Bangladesh Insurance Association, and the Bangladesh Insurance Forum—must work in a coordinated manner. A clear circular from Bangladesh Bank is particularly crucial regarding the conduct of insurance business through banks. In coordination with the Finance Division, Bangladesh Bank could issue directives to all scheduled banks stipulating that no bank official or manager may accept any commission, gift, benefit, or financial incentive—whether direct or indirect—in connection with insurance business. At the same time, insurance-related transactions conducted through banks must be made transparent and auditable. Bangladesh Bank needs to exercise oversight to ensure that no covert financial transactions take place under the guise of insurance premiums, commissions, brokerage fees, or other financial benefits.
If evidence of a bank official or manager accepting a commission is found, action must not be limited to the individual concerned; the institution’s liability must also be determined through an investigation.

Regular raids on General Insurance Company branches

Field-level monitoring is another crucial aspect of implementing the zero-commission policy; this system cannot be effectively enforced merely by reviewing reports at the head office. It is necessary to conduct periodic on-site inspections of the branches and business operations of general insurance companies across various regions of the country. During these inspections, relevant financial records—such as documents regarding commission payments or receipts, accounts, vouchers, bank transactions, agent payments, and business acquisition costs—can be examined. Risk-based and surprise inspections must be arranged as necessary. If concrete evidence of commission payments by an establishment is found, administrative and financial measures must be taken in accordance with prevailing laws and regulations. Legal actions—such as imposing fines, suspending or cancelling licenses, or closing down or sealing off branches—must be implemented based on the severity of the offense. However, every measure taken must be evidence-based, transparent, and consistent with existing laws and regulations. Merely imposing a fine on the company is not enough; an investigation must also determine whether the concerned branch manager or responsible official bears personal liability. At the same time, the failure of the board of directors and senior management to exercise proper oversight must be taken into account.

This is because the payment of excessive commissions is not merely the personal decision of an individual employee; in many instances, it may well be part of an institutional business decision. Merely imposing a fine on the company is not enough; an investigation must also determine whether the concerned branch manager or responsible official bears personal liability. At the same time, the failure of the board of directors and senior management to exercise proper oversight must be taken into account. This is because the payment of excessive commissions is not merely the personal decision of an individual employee; in many instances, it may well be part of an institutional business decision. To effectively implement a zero-commission policy, it is not enough to simply eliminate commissions; attention must also be paid to other costs associated with business acquisition. It is crucial to monitor whether the same funds are being paid out under different labels—such as ‘marketing costs,’ ‘consultancy fees,’ ‘promotional expenses,’ or ‘service charges’—in lieu of commissions. n this regard, alongside the IDRA, chartered accountants, auditors, and the relevant financial oversight mechanisms also need to be made more effective.In this regard, alongside the IDRA, the roles of chartered accountants, auditors, and relevant financial oversight mechanisms must also be made more effective.
High-risk entities can be identified by regularly analyzing data on the income and expenditure, commission-related costs, business acquisition expenses, and claim settlements of each insurance company.

The crisis in the life insurance sector also demands equal attention

Alongside implementing a zero-commission policy in the non-life insurance sector, it is also crucial to overcome the current crisis facing the life insurance industry. There are concerns regarding the non-payment of long-overdue claims, delays in claim settlement, and the financial instability of various life insurance companies in the country.
Ordinary policyholders are the ones who suffer the most from an insurance company’s financial instability. If a policyholder does not receive the money due to them in their time of need after paying premiums for years, confidence erodes not only in that specific company but in the entire insurance system.

Selling assets to solve problems should not be the only way

The sale of assets might be considered to settle the outstanding claims of certain companies. However, if asset sales are adopted as the sole solution in every instance, there is a risk that the companies’ financial foundations will weaken further in the long run.

As an alternative, a support framework involving the government or relevant financial institutions—subject to specific conditions—could be considered. The feasibility of government guarantees or mortgage-backed financing could also be examined in principle, provided there are sufficient assets and corresponding security.

Conditional Support Must Be Strictly Tied to Reform

However, any such support must be strictly conditional. Public money should not be used to cover up irregularities or mismanagement in any institution. Instead, any assistance should be linked to the prompt settlement of genuine and legitimate customer claims, management reform, cost control, transparent accounting of assets, and a clear reform plan designed to prevent similar crises in the future.

Such an approach could, on the one hand, create an opportunity to settle customer claims quickly and, on the other, reduce the need for companies to sell off productive assets all at once.

Time-Bound Targets Are Essential for Faster Claim Settlement

In insurance claim settlement, the biggest problem for customers is uncertainty over when they will actually receive their money. Therefore, a separate roadmap should be prepared for each distressed insurance company.

It should be determined how much money remains outstanding in claims, how much of that amount is valid and payable, how much is disputed or questionable, how much can be generated from assets, and how much can be paid from the company’s own income. Based on these assessments, monthly and quarterly targets should be established.

The Insurance Development and Regulatory Authority (IDRA) should regularly monitor these targets and disclose public-interest information as transparently as possible.

If asset sales, litigation, administrative procedures and other processes continue for years, many customers may face further financial and social hardship before receiving the money they are legally entitled to. At the same time, this could have a negative impact on confidence in the entire insurance sector.

Restoring Customer Confidence Must Be the Central Objective

The core asset of the insurance business is public trust. Just as a bank depends on the confidence of depositors, an insurance company rests on the trust of its policyholders.

Therefore, customers must remain at the centre of every reform initiative. Before selling new policies, companies should ensure that they have sufficient capacity to settle outstanding claims of existing policyholders.

A system could also be introduced requiring the regular disclosure of information on a company’s financial strength, claim settlement ratio, complaint resolution and outstanding claims.

In addition, a centralised digital claim-tracking system could be introduced through which customers would be able to check the current status of their claims. This could reduce dependence on intermediaries and brokers while also reducing customer harassment.

The Agency System Also Needs Reform Alongside Zero Commission

If the decision to eliminate commissions for individual agents is implemented, the future role of agents must also be clearly defined.

Training, licensing, responsibilities, mandatory disclosure requirements and codes of conduct for agents should be strengthened.

Agents should not be motivated merely to sell policies. Instead, a framework should be established under which they are responsible for helping customers select products according to their needs, explaining policy terms and conditions, and providing accurate information about the claims process.

 A Culture of Accountability Is Essential

Insurance-sector reform will only be sustainable when accountability is ensured based on proven conduct rather than the identity or position of the individual involved in an irregularity.

The responsibilities of boards of directors, chief executive officers, senior management, branch managers, agents and relevant officials must be clearly defined. At the same time, the supervisory mechanisms of the regulator must also be subject to accountability.

After a circular is issued, it is equally important in the public interest to know whether it was actually implemented, how many institutions complied, where irregularities were detected and what action was taken.

অবশ্যই। নিচে আপনার পুরো লেখাটি পেশাদার, প্রাঞ্জল ও নীতিগত/ব্যাংকিং-বীমা খাতের উপযোগী ইংরেজিতে অনুবাদ করে দিলাম।

A Step-by-Step Action Plan for Implementing Zero Commission

To make the implementation of zero commission effective and sustainable, a time-bound action plan needs to be adopted. Merely issuing directives and waiting for results will not produce the desired outcome. All relevant institutions must be assigned clearly defined responsibilities and the policy should be implemented in phases.

Phase One: Coordinated Government Directives

At the initial stage, a joint meeting among the Finance Division, Bangladesh Bank, and the Insurance Development and Regulatory Authority (IDRA) should be held to establish a comprehensive framework for implementing zero commission.

At this stage, it should be clearly determined:

• What types of commissions, fees, or financial benefits will be prohibited;
• What will constitute direct and indirect commissions;
• What responsibilities will be assigned to banks, insurance companies, agents, brokers, and corporate intermediaries;
• Which authority will take action when irregularities are detected;
• What will be the timeframe for investigating and resolving complaints.

Following this, Bangladesh Bank may issue mandatory instructions to all scheduled banks and relevant financial institutions across the country.

Phase Two: Making the Banking Channel Commission-Free

One of the most important areas for implementing zero commission is the banking channel. Bangladesh Bank’s circular should clearly state that no bank official, branch manager, or responsible officer may receive any direct or indirect financial benefit in exchange for insurance business.

The collection and payment of insurance premiums through banking channels should also be made more transparent. Digital records of every transaction should be maintained so that the movement of funds can be traced during subsequent audits or investigations.

In cases where irregularities are proven, appropriate action should be taken against the concerned officer or manager in accordance with the bank’s service rules, applicable laws, and regulatory provisions.

Phase Three: Establishing a Commission-Related Baseline for All Insurance Companies

Before implementing zero commission, IDRA should establish a baseline covering commissions and business-acquisition expenses of all non-life insurance companies.

For each company, data from the past several years may be collected and analyzed, including:

• Total premium income;
• Commission expenses;
• Business acquisition expenses;
• Payments made to agents and intermediaries;
• Other marketing expenses;
• Claims paid;
• Reserves;
• Investments; and
• Cash and liquid assets.

This will make it possible to measure the actual changes after zero commission comes into effect.

Phase Four: Branch-Level Risk Assessment

Branches of all non-life insurance companies may be classified according to risk levels.

Branches showing:

• Unusually high business growth;
• Abnormally high business-acquisition expenses;
• Large amounts of unexplained expenditure;
• Commission-related complaints;
• Unusual cash transactions; or
• A high volume of customer complaints

should be placed on a high-risk list and inspected on a priority basis.

Phase Five: Surprise and Regular Inspections

The most important test of zero commission will take place at the field level.

IDRA may establish a specialized supervisory team to conduct periodic inspections of different insurance company branches. Where necessary, unannounced inspections should also be arranged.

During inspections, the company’s books of accounts, vouchers, bank statements, agent payments, business-acquisition expenses, consultancy and marketing expenses, and other relevant documents should be examined.

Phase Six: Closing Alternative Channels for Commission Payments

One of the biggest risks associated with zero commission is that the same financial benefits may continue to be provided under different names.

Therefore, it will not be sufficient to look only for the word “commission.” Regulators must also examine whether unusually large payments are being made under headings such as:

• Marketing expense;
• Consultancy fee;
• Service charge;
• Business development expense;
• Entertainment expense; or
• Any other similar category.

Strengthening forensic audit mechanisms will be essential in this regard.

Phase Seven: Establishing a Safe Complaint Mechanism

A dedicated complaint mechanism should be established so that customers, agents, bank officials, or employees of insurance companies can safely report information regarding commission-related transactions.

IDRA may launch a digital complaint platform on its website where complaints can be submitted along with supporting evidence.

If appropriate safeguards are put in place to protect the identity of complainants, the likelihood of receiving information about irregularities will also increase.

Phase Eight: Graduated Penalties for Proven Irregularities

A clear penalty structure should be established in advance for effective implementation of zero commission.

Depending on the severity of the violation, measures may include:

1. Warning;
2. Financial penalty;
3. Administrative action against the responsible officer;
4. Suspension of licence;
5. Cancellation of licence;
6. Closure or sealing of a branch; and
7. In serious cases, filing of cases or taking other legal action under applicable laws.

However, in every case, proper investigation, adequate evidence, and compliance with existing laws and regulations must be ensured.

Phase Nine: Accountability of the Board of Directors

Commission-related irregularities should not be treated solely as misconduct by field-level employees. Sustainable reform will not be possible without addressing institutional accountability.

If persistent irregularities are found within a company, an investigation should determine whether the board of directors and senior management were aware of the practices, whether they approved or supervised them, and whether they took appropriate measures to prevent them.

Where institutional failure is established, accountability of the board and management should be ensured in accordance with applicable laws and regulations.

Phase Ten: Monthly Monitoring Reports

IDRA should establish a monthly monitoring mechanism to measure progress in implementing zero commission.

Each month, the following indicators may be reviewed:

• Number of institutions inspected;
• Number of complaints received;
• Number of complaints under investigation;
• Number of proven irregularities;
• Actions taken;
• Changes in the financial indicators of companies following the reduction or elimination of commission expenses; and
• Whether there has been any improvement in claims settlement.

Publishing a summarized portion of this information for the public could also strengthen confidence in the regulatory system.

A Separate Action Plan for Settling Outstanding Life Insurance Claims

Alongside the implementation of zero commission in the non-life insurance sector, a separate time-bound action plan should be adopted to settle outstanding claims in the life insurance sector.

First: Company-Wise List of Outstanding Claims

Each company should prepare a list showing the total outstanding claims, the age of each claim, the claim amount, and the nature of the claim.

Claims that have remained unsettled for more than one year should receive particular priority.

Second: Classification of Claims

Instead of treating all claims in the same manner, they may be classified into categories such as:

• Claims ready for immediate settlement;
• Claims under investigation;
• Claims with incomplete documentation;
• Disputed claims; and
• Court-related claims.

This classification would allow claims that can be settled quickly to be paid first.

Third: Comprehensive Assessment of Assets and Liabilities

For each financially distressed company, an independent assessment of assets, liabilities, investments, cash flow, and future obligations is necessary.

Before selling assets, it should be determined which assets could undermine the company’s long-term capacity if sold and which assets could be utilized to generate liquidity quickly without compromising its future sustainability.

Fourth: Conditional Financial Assistance

For companies that possess genuine assets but are facing temporary liquidity shortages, the possibility of financial assistance from the government or relevant financial institutions may be considered under strict conditions.

If public funds are used, such assistance should be linked to clear obligations, including settlement of customer claims, management reform, cost control, and repayment of the assistance within a specified period.

Fifth: Specific Timeframes

Each financially distressed company should be required to submit a roadmap for settling its outstanding claims within a specified period.

For example, a defined portion of claims may be settled within the first six months, another portion during the following six months, and the remaining eligible claims within a predetermined deadline.

If a company fails to meet the prescribed deadlines, IDRA should take appropriate regulatory action.

Three-Tier Monitoring Mechanism

A three-tier monitoring mechanism may be established for both zero commission and claims settlement.

First Tier: Internal compliance and audit of the insurance company.

Second Tier: Direct supervision and inspection by IDRA.

Third Tier: Coordinated monitoring by Bangladesh Bank, the Finance Division, and other relevant government institutions.

An effective information-sharing mechanism among these three tiers would make it easier to identify and prevent irregularities.

First Evaluation After Six Months

A comprehensive evaluation should be conducted six months after the implementation of zero commission.

The assessment should examine:

• Whether commissions have actually been eliminated;
• Where business-acquisition expenses have shifted;
• What changes have occurred in the financial strength of insurance companies;
• Whether the claims settlement rate has improved; and
• Whether any new forms of irregularities have emerged.

If necessary, the policy should be revised based on the experience gained during the first six months.

Visible Results Within One Year

The ultimate objective of successful zero commission implementation should not be limited to eliminating commissions. Several visible improvements should be ensured within one year.

First, the culture of commission-driven business acquisition should decline.

Second, financial discipline within insurance companies should improve.

Third, the capacity and speed of claims settlement should increase.

Fourth, customer complaints and harassment should decline.

Fifth, the foundation for rebuilding public confidence in the insurance sector should be established.

Ultimately, it must be recognized that the success of zero commission is not the sole responsibility of any one institution. It is a coordinated reform process.

IDRA must perform its role as the regulator, Bangladesh Bank must ensure discipline within the banking channel, the Finance Division must provide necessary policy coordination, and insurance companies must bring changes to their own business practices and corporate culture.

The issuance of a circular will be only the first step. Implementation, monitoring, accountability, and settlement of customer claims will be the four key measures of ultimate success.

Final Remarks

Zero commission in the non-life insurance sector is not merely an administrative decision. If properly implemented, it could mark the beginning of a significant transformation in the business culture of Bangladesh’s insurance industry. However, the success of such a reform will ultimately depend on its implementation.

Alongside IDRA’s directives, there must be clear circulars from Bangladesh Bank, coordination by the Finance Division, strict monitoring of banking channels, regular inspections of insurance company branches, verification of financial records, lawful penalties for proven irregularities, and accountability of boards of directors and senior management.

At the same time, the settlement of outstanding claims in the life insurance sector requires a clear roadmap, proper utilization of assets, conditional financial assistance where necessary, and strict monitoring. Under no circumstances should a situation be allowed to develop in which customers have to wait for years to receive legitimate claims.

Because a crisis in the insurance industry is not merely a crisis for insurance companies; it is directly connected with people’s savings, future financial security, and confidence in the financial system.

If commission-driven business practices can be eliminated, discipline can be introduced into claims settlement, accountability for irregularities can be ensured, and customer interests can be restored to the center of insurance business, the insurance sector of Bangladesh will have an opportunity to rebuild itself.

However, if zero commission remains confined to paper, like many previous directives, the opportunity for meaningful reform may be lost. The greatest loss will ultimately be suffered by ordinary customers. Once people permanently lose confidence in the insurance system, rebuilding that confidence will be extremely difficult.

Therefore, what is needed now is not another announcement, but the strict, transparent, and visible implementation of the announcement already made.

The success of zero commission will not be determined by the language of the circular, but by its implementation at the field level.

And the future of the insurance sector should not be measured merely by how much business companies generate, but by how quickly and fairly they are able to stand beside their customers when they need support most.