Two shop owners in the same market buy fire insurance. One goes to a large, well-known company. The other picks a smaller one. When they compare notes over tea, the premiums are almost the same. Neither of them got a special deal, and neither was overcharged. That is the insurance tariff at work.
In simple terms, an insurance tariff is the approved list of premium rates that insurers in Bangladesh follow for most general (non-life) insurance. The Insurance Development and Regulatory Authority, usually called (IDRA), is the government body that oversees the system.
If you own a business, drive a vehicle, import goods or are simply buying a policy for the first time, understanding the tariff helps you know what you should be paying and why. This guide explains it step by step, in plain language.
Think of a tariff as a rate card. It tells an insurer how much premium it may charge for a certain type of risk. A factory, a shop, a cargo shipment and a private car each carry different levels of risk, so each falls under a different part of the rate card.
The basic calculation is easy to follow:
Sum insured × tariff rate = premium. Then VAT is added on top.
For fire insurance, the rate is taken from the Fire Tariff. It depends on what the cover includes and on the nature of the risk. A warehouse full of paper is riskier than an office, so the rate is different. VAT is charged at 15% on the premium.
Here is an example with made-up numbers, only to show how it works. Suppose you insure a shop for Tk 1 crore, and the applicable rate is 0.20%.
Please do not treat 0.20% as a real rate. The actual figure depends on the current tariff and your type of risk, so always ask your insurer which rate applies.
Not every risk is priced from a fixed rate card. Some unusual or very large risks are “non-tariff” business. In those cases, the insurer works out the price itself, usually with help from its reinsurers, and reports it to the regulator.
| Tariff business | Non-tariff business | |
| Who sets the price? | The approved tariff | The insurer, based on the risk, and reported to the regulator |
| How flexible is it? | Very little | More room, but rules still apply |
| Common examples | Standard fire, marine cargo, motor | Specialised or unusual risks |
The rules for insurance in this part of the world go back a long way. For decades, the Insurance Act of 1938 governed the sector. In 2010, two new laws replaced it: the Insurance Act 2010 and the IDRA Act 2010. Both came into effect on 18 March 2010, and IDRA was set up as the main regulator.
The general (non-life) insurance market in Bangladesh is tariff based. The idea behind this is to keep competition fair and protect policyholders. Here is how it is meant to help:
There is also a practical side. Insurance is still a small part of Bangladesh’s economy. Premiums make up well under 1% of GDP, one of the lowest levels in the region. Many people and businesses are uninsured or underinsured. That is one reason the way rates are set matters so much, and why it keeps being debated, which we cover later in this guide.
The tariff mainly covers the main classes of non-life insurance: fire, marine cargo, marine hull, motor and miscellaneous. Here is what each means for you.
This is the cover most business owners buy first. A standard fire insurance policy protects buildings, stock and machinery against fire and related events. . The rate depends on what your premises are used for, how risky they are, and whether you add allied perils like Riot, Strike and Malicious Damage (RSMD) cover.
You may also hear about Industrial All Risks (IAR) cover, which gives broader protection than standard fire insurance for larger businesses, and declaration-based policies, where the insured value changes over time and is reported to the insurer.
If you run a factory or a large warehouse, ask your insurer whether either fits your business.
If you import goods, you probably already know that marine cargo insurance must be bought from a local insurer. The rates are set by the tariff. In August 2020, IDRA set the rates at 0.45% for ICC-A and ICC-B cover and 0.30% for ICC-C cover. ICC stands for Institute Cargo Clauses, and A, B and C describe how wide the protection is, with A being the broadest.
Motor insurance comes in two main forms. Third-party cover pays for damage or injury you cause to others. Comprehensive motor insurance cover also protects your own vehicle. The rate depends on the type of vehicle, its value and the cover you choose.
Motor insurance is also where “no-claim bonus” (NCB) offers show up. We will come back to this in the section on red flags.
This group covers a wide range of other policies, such as personal accident and engineering risks. The tariff applies to many of these as well, so it is worth asking.
| Class | Who it affects | What drives the rate |
| Fire | Shop owners, factories, warehouses | Use of the building, type of stock, level of cover |
| Marine cargo | Importers and exporters | Type of cover (ICC-A, B or C) |
| Motor | Vehicle owners and fleets | Vehicle type, value, cover type |
| Miscellaneous | Individuals and businesses | The specific risk |
IDRA does not just publish a rate card and walk away. It plays several roles at once.
The Insurance Act 2010 created IDRA to supervise the insurance business and protect policyholders. Under the law, any company that wants to sell insurance in Bangladesh must register with IDRA and follow its rules and guidelines. An unregistered company has no business selling you a policy.
The tariff itself is decided by a body called the Central Rating Committee (CRC). It works with insurance experts under the leadership of IDRA’s Chairman. The committee determines and approves the tariff for insurance business in Bangladesh, and it reviews rates from time to time. Rates can be adjusted based on how a particular sector or client category has performed.
IDRA communicates its rules mainly through circulars sent to insurers. Some recent examples show how active it is:
In short, the regulator does not only set the rules. It checks whether companies follow them.
Rates are only half of the picture. A cheap policy is of little use if the company cannot pay your claim. That is why IDRA also sets solvency requirements, which are rules about how much money an insurer must keep in reserve compared with the risks it has taken on. It also looks at how insurers handle claims. The tariff and the solvency rules work together: one keeps prices fair, the other helps make sure the money is there when you need it.
If you are buying a motor or personal cover, you usually cannot negotiate the base rate, because it is set by the tariff. So do not spend your energy haggling over price. Compare the things that can differ:
Be careful with the word “discount.” Some discounts are allowed, and some are not. If an agent or company offers a big reduction, ask them to explain it and put it in writing.
If you run a business, your fire, marine or miscellaneous cover is probably priced from the tariff, so quotes from different insurers may look similar. The difference shows up in service and in how the company behaves at claim time.
Larger risks work a little differently. When the total value at risk is large, the insurer may need to pass part of it to a reinsurer, and the reinsurer’s own pricing then comes into play. If your business has high-value assets, ask your insurer how your risk will be handled.
Before choosing, compare policy terms, exclusions and the company’s reputation for paying claims. A policy that is slightly cheaper but slow to pay is rarely a good deal.
Because rates are regulated, some offers should make you stop and ask questions:
None of this means every discount is wrong. It means you should ask, and you should keep the answer in writing.
Like most systems, the tariff has supporters and critics. It helps to hear both.
The case for it. A fixed rate card prevents reckless price cutting. It keeps insurers from competing on price so hard that they cannot pay claims. For many buyers, it also makes prices easier to understand.
The case against. Critics argue that many of the rates trace back to the 1938 law and do not reflect today’s data or newer risks. Because insurers follow a published rate, there is little reason for them to build their own skill in assessing risk. Some also say this pushes local companies to depend on foreign underwriters.
Marine insurance is a good example. Some business owners and experts say the 0.30% minimum rate for imports is high compared with international levels, and that the cost eventually gets passed on to consumers. A 2021 court order noted that the existing fixed rates were not fully competitive and said the authorities could take steps to make them more so.
What may come next. Some industry leaders have called for a move toward a “non-tariff” system, where insurers price risks more freely. Others worry about what that could do to market stability. There is no final answer yet, so this is worth following if you are in a sector affected by these rates.
Before you sign any policy, run through this list:
An insurance tariff is simply a set of approved rates that keeps pricing fair and consistent for most general insurance in Bangladesh. The Central Rating Committee decides the rates, and IDRA oversees the system and makes sure companies follow the rules.
For you as a buyer, the useful takeaway is this: the price is often fixed, so spend your time comparing coverage, claim handling and the company’s record. And if an offer looks unusually cheap, ask why.
Every business and every household faces different risks, so it is worth talking to a licensed insurance adviser before you decide. . They can look at your situation and tell you what makes sense for you.
No. The tariff is the approved list of rates. The premium is the actual amount you pay, worked out from that rate and the value you insure, plus VAT.
For tariff business, generally no. Charging below the approved rate is treated as undercutting. For non-tariff risks, insurers can set their own price, but they must follow the reporting rules.
The Central Rating Committee, which works under the leadership of the IDRA Chairman, determines and approves the tariff. IDRA oversees the system and enforces it through its circulars.
The tariff system mainly applies to general (non-life) insurance. Life insurance products work differently, though they are still supervised by IDRA. If you are unsure how your policy is priced, ask your insurer to explain.
On IDRA’s official website. If you cannot find the company there, do not buy from it until you have confirmed its status with IDRA.
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