IDRA Suspends Green Delta and BGIC From Selling Marine Cargo Insurance for Three Months

Bangladesh's insurance regulator has barred two of the country's best known non life insurers from selling marine cargo cover for three months, saying both companies secretly undercut a mandatory tariff rate to win business. The move exposes a decades old fight over whether that tariff protects insurers from a damaging price war, or simply forces importers to overpay for a product most other countries price far more cheaply.

• The Insurance Development and Regulatory Authority suspended Green Delta Insurance and BGIC's marine cargo registration for three months after an unannounced inspection of their head offices.
• Both insurers must also explain within 30 days why that suspension should not become permanent.
• IDRA says the companies gave unauthorised premium discounts, undercutting the mandatory 0.30 percent tariff rate set by the Central Rating Committee.
• BGIC's own CEO has admitted the undercutting, while arguing the tariff itself is too expensive for importers and that IDRA should have held a hearing first.

What IDRA found

The regulator's oversight team inspected the head offices of Green Delta Insurance PLC and Bangladesh General Insurance Company PLC on November 2, and by the next day had issued a suspension order covering both insurers' marine cargo operations for three months. IDRA says the two companies offered unauthorised premium reductions to several clients through the year, bypassing the fixed marine cargo tariff that all non life insurers are required to follow. The regulator argues this breaches both the Insurance Act and its own circular barring unfair discounts, arbitrary rate cuts and unapproved rebates, on the theory that uniform pricing protects insurers' financial health and prevents a race to the bottom that could leave the sector undercapitalised.

IDRA Chairman Mir Nadia Nivin did not mince words, saying the companies knew the rules and broke them deliberately. "If they think this tariff is not competitive, they can tell us for a non-tariff option," she said, suggesting the regulator has a formal channel for insurers who object to the fixed rate, one that Green Delta and BGIC apparently bypassed rather than used.

"Without hearing, such punishment will inconvenience our clients," said BGIC managing director and CEO Ahmed Saifuddin Chowdhury, who acknowledged his company had undercut premiums but argued the tariff itself is high and costly for clients, and that the regulator should have held a hearing before acting.

A fight that predates this week's suspension

The 0.30 percent marine cargo rate at the centre of this dispute is not new, and neither is the complaint against it. IDRA set marine import premiums at 0.45 percent for the ICC-A and ICC-B coverage categories and 0.30 percent for ICC-C, the cheapest tier that most importers choose, back in August 2020. Industry critics have argued for years that this minimum sits well above international norms, which they put at roughly 0.01 to 0.1 percent, and that no comparable country, including India and Pakistan, imposes a minimum rate at all. Steel maker BSRM took the fight to Bangladesh's Competition Commission in 2021, and a commission order that November found the fixed rates were not fully competitive and urged IDRA to loosen them, guidance that evidently never translated into a change in the rule itself.

The stakes for importers are not trivial. Industry estimates put total marine insurance spending by Bangladeshi importers at around Tk240 crore a year, a cost insiders say gets passed straight through to consumers, against roughly $80 billion in annual imports, much of it moving by sea and legally required to be insured through a domestic company. Shipments above Tk100 crore can be reinsured abroad at rates as low as 0.05 percent, but ordinary importers cannot buy marine cover directly from a foreign insurer, leaving them stuck with the domestic tariff however it is priced.

Why this suspension cuts both ways

IDRA's action punishes Green Delta and BGIC for breaking a rule, but it does nothing to resolve the underlying argument that the rule itself may be badly calibrated. If the tariff really does sit several times above what competitive pricing would produce, as critics including a prior Competition Commission order have suggested, then insurers undercutting it quietly were arguably giving importers a fairer deal, even while violating the letter of IDRA's circular. IDRA's response, working with Bangladesh Bank and Bangladesh Customs on a system to close gaps in marine premium business, suggests the regulator intends to enforce the existing tariff more strictly rather than revisit whether it is still the right number, at least for now.

What it means for you

If you import goods and have been quietly getting a discounted marine cargo rate from either insurer, expect that to end: BGIC has already said it will tell clients it must raise premiums and will follow minimum premium rules going forward, so budget for the full 0.30 percent tariff on your next shipment rather than whatever rate you were charged before. If you run a business that imports regularly, this is a reasonable moment to ask your insurer directly which tariff category your cargo falls under and to compare that against the cost of insuring larger shipments abroad, where the rules allow it, since the gap between domestic and international marine insurance pricing is central to why this dispute exists in the first place. If you hold shares in either insurer, a three month suspension of one product line is a narrower problem than it might sound, but the 30 day show cause clock now running on both companies is worth watching, since IDRA has reserved the option of a permanent bar from marine cargo underwriting.