Fire Insurance in Bangladesh: Coverage, Claims, Statistics & Growth

 

Fiire insurance in Bangladesh 

Bangladesh burns more than most people realize. In 2025 alone, the country recorded 27,059 fire incidents — an average of 75 fires every single day. These fires killed 85 people, injured 267 more, and destroyed nearly Tk 570 crore worth of property. Yet despite this scale of risk, fire insurance remains one of the most underused financial products in the country. This post breaks down where the market stands today, why it's growing, what's holding it back, and exactly how the claims process works if you ever need to use your policy.

Why Fire Insurance Matters in Bangladesh

Bangladesh is a country of dense cities, informal electrical wiring, garment factories packed with flammable material, and wooden or semi-permanent housing in many areas. That combination creates a level of fire exposure that few countries face at this scale.

According to the Fire Service and Civil Defence (FSCD), the causes of the 2025 fires break down roughly as follows:

• Electrical short circuits — 9,392 incidents (34.7%), by far the leading cause
• Burning cigarette or bidi stubs — 4,269 incidents (15.8%)
• Kitchen stoves — 2,909 incidents (10.75%)
• Gas cylinder leaks — 920 incidents
• Gas supply line leaks — 562 incidents
• Gas cylinder explosions — 121 incidents

Residential buildings were hit hardest, accounting for 8,705 incidents (32.2% of the total), followed by straw stacks, shops, markets, shopping malls, and both garment and non-garment factories. Fires peaked in the dry months — January through April and again in December — with March alone recording 3,522 incidents, the highest of any month.

This isn't a one-year anomaly either. In 2024, Bangladesh logged 26,659 fire incidents that killed 140 people. The trend line shows fire remains a persistent, near-daily risk across the country — which is exactly the kind of risk insurance exists to absorb.

The Current State of Bangladesh's Insurance Market

Bangladesh's overall insurance sector is small relative to its economy, and fire insurance sits inside that broader picture.

For 2025, total insurance premium income across the country came to roughly BDT 18,534 crore, split between life insurance (BDT 12,042 crore) and non-life insurance (BDT 6,492 crore), which is the category fire insurance falls under. That entire premium pool represents just 0.33% of GDP — a strikingly low insurance penetration rate compared to global norms, where penetration often runs into several percentage points of GDP.

The non-life segment, where fire insurance lives alongside marine and motor insurance, is served by a fragmented market. As of 2025, there were 45 licensed private non-life insurers operating in the country, plus the state-owned Sadharan Bima Corporation (SBC), which also handles much of the domestic reinsurance load. Non-life insurers are required to cede 50% of reinsurable business to SBC, a structural feature that shapes how fire risk is ultimately absorbed in the market.

Within non-life insurance, motor insurance dominates premium share at around 40%, driven by rising vehicle ownership and mandatory coverage rules. Fire and marine insurance combined account for roughly 30% of non-life premiums — meaning fire insurance, while not the largest line, is still one of the core pillars of the general insurance business in Bangladesh.

Growth Drivers

A few forces are pushing fire insurance demand upward, even from a low base:

Rapid urbanization and industrial growth. Cities like Dhaka, Gazipur, Chattogram, and Narayanganj are expanding fast, with garment factories, warehouses, and dense commercial buildings multiplying every year. More built assets simply means more insurable fire risk.

Regulatory tightening. The Insurance Development and Regulatory Authority (IDRA), established under the Insurance Act 2010, has been increasing oversight of the sector. In April 2024, IDRA issued an Insurance Claims Management Guideline that mandates specific timelines for claim assessment, settlement, and grievance handling — a direct attempt to make claims (including fire claims) more predictable and trustworthy.

Bancassurance and digital distribution. Banks are increasingly partnering with insurers to bundle policies with loans and accounts, while digital platforms are making it easier to buy and manage general insurance products, including property and fire cover.

Global market tailwinds. The global fire insurance market itself is projected to grow at a compound annual rate of roughly 11–12% through the early 2030s, driven by rising property values and increasing awareness of climate and fire risk. Bangladesh, as an emerging, industrializing economy, sits squarely in the path of that broader trend.

Willingness to pay is already there — just untapped. A recent academic study of fire-hazard-prone Dhaka neighborhoods (Moghbazar, Old Dhaka, Bailey Road, Banani, and others) found that 47% of surveyed residents were willing to pay for fire insurance, with business owners and personal fire-incident experience being strong predictors. That's a meaningful pool of latent demand that the market hasn't yet converted into actual policies.

What's Holding the Market Back

Growth potential aside, fire insurance in Bangladesh faces real structural headwinds:

Low awareness and trust. Many property owners simply don't understand what fire insurance covers, how premiums are calculated, or how claims work — and a lack of information consistently shows up as a barrier to purchase in research on this market.

Poor claim settlement track record. This is arguably the biggest credibility problem the industry faces. Non-life insurance claim settlement ratios in Bangladesh have been reported as low as around 10% in recent years, compared to roughly 34% for life insurance — figures tied to underinvestment, weak governance, and in some cases outright mismanagement at individual insurers. When people hear stories of claims going unpaid, it directly suppresses demand for products like fire insurance.

Solvency and governance concerns. IDRA has classified a number of general insurers as "high-risk" and has opened investigations into several companies over financial irregularities, which understandably makes some businesses hesitant to place large fire risks with smaller or less established insurers.

High premiums relative to income. For lower-income households and small businesses — often the ones most exposed to fire risk in dense, informal settlements — premiums can feel like an unaffordable "extra" rather than a necessity, especially without regulation mandating coverage the way motor insurance is mandated.

The Future Outlook

The direction of travel looks positive, even if the pace is gradual:

• Regulatory modernization is actively underway. IDRA's 2024 Claims Management Guideline, ongoing risk-based supervision reforms, and a proposed Insurer Resolution Ordinance all point toward a market regulators are trying to make more disciplined and trustworthy.
• Industrial and commercial growth, particularly in the ready-made garment sector, will keep expanding the pool of high-value, fire-exposed assets that need coverage — and increasingly, buyers (including international clients and factory certification bodies) are pushing local manufacturers toward proper risk transfer, including fire insurance.
• Digital and bancassurance channels should continue lowering the friction of buying a policy, which matters in a market where distribution has historically been a bottleneck.
• Consolidation pressure on weaker insurers, driven by IDRA's stricter oversight, could eventually leave a smaller number of more financially sound non-life insurers — which, if handled well, could actually rebuild trust in the sector's ability to pay claims.

The ceiling here is large. With insurance penetration sitting at just 0.33% of GDP, even modest improvements in trust, affordability, and distribution could meaningfully expand the fire insurance market over the next five to ten years.

How to File a Fire Insurance Claim in Bangladesh

If you already hold a fire insurance policy — on a home, shop, factory, or warehouse — here's how the claims process generally works under Bangladesh's regulatory framework.

1. Report the incident immediately. Notify your insurer as soon as possible after the fire, and also file a report with the local Fire Service and Civil Defence station and police, if applicable. Prompt notification is typically a condition of the policy, and delays can complicate or jeopardize your claim.

2. Document everything before cleanup begins. Take photographs and video of the damage from multiple angles before anything is moved, repaired, or cleared away. Gather supporting records: purchase receipts, inventory lists, machinery valuations, and any maintenance or safety documentation for the affected property.

3. Submit a formal claim to your insurer. This includes a completed claim form, a copy of your policy documents, the fire service report, and an itemized estimate or description of the loss.

4. A licensed surveyor inspects the damage. Under Bangladeshi law, IDRA requires that an independent, licensed insurance surveyor or loss assessor physically inspect the property before any claim is settled. The surveyor acts as a neutral party between you and the insurer — visiting the site, documenting the damage, taking their own photographs, reviewing your records, and determining the cause of the fire along with a fair, evidence-based estimate of the loss.

5. Cooperate and provide complete records. Claims move faster and face fewer disputes when the policyholder shows up prepared — organized documentation, clear timelines, and honest disclosure all help. Incomplete or inconsistent paperwork is one of the most common reasons claims stall.

6. Understand how your payout will be calculated. Bangladeshi property policies generally use one of two valuation approaches:

• Market value (depreciated value): pays out what the damaged property was worth just before the fire, accounting for age and wear — often less than replacement cost.
• Replacement value: pays what it would cost to replace the property new, which is typically the better option for high-value equipment or machinery but usually comes with a higher premium. Know which basis your policy uses before you ever need to file a claim — it significantly affects your payout.

7. Claim assessment and settlement. Once the surveyor's report is submitted, the insurer reviews it against your policy terms and issues a settlement offer. IDRA's 2024 Claims Management Guideline was specifically introduced to put mandated timelines around this stage — assessment, settlement, and grievance redressal — to reduce the kind of open-ended delays that have historically plagued the sector.

8. Escalate if needed. If a claim is unreasonably delayed, underpaid, or denied, policyholders can raise a grievance directly with the insurer's complaints channel, and ultimately escalate to IDRA, which has a mandate to help resolve disputes and settlement issues between insurers and policyholders.

Key Takeaways

Fire is a daily, measurable risk in Bangladesh — not a rare catastrophe. With over 27,000 incidents in 2025 and Tk 570 crore in losses, the exposure is real and growing alongside urbanization and industrial expansion. Yet fire insurance uptake remains constrained by low awareness, weak claim settlement history, and thin overall insurance penetration.

The opportunity, though, is just as real as the risk. Regulatory reform through IDRA, growing bancassurance and digital distribution, and rising asset values in cities and industrial zones all point toward a fire insurance market that has real room to mature — provided insurers can rebuild trust by actually paying claims promptly and fairly.

For property owners and business operators, the practical takeaway is simpler: get properly valued coverage before a fire happens, keep your documentation organized, and understand your policy's valuation basis — because when a fire does happen, in Bangladesh, the odds say it will happen to someone you know.

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Sources: Fire Service and Civil Defence (2025 annual report), Insurance Development and Regulatory Authority (IDRA), The Daily Star, The Business Standard, Dhaka Tribune, bdnews24, Springer Nature (Fire Technology journal), Grokipedia, and Green Delta Insurance.