As the development of the insurance sector can help boost the country’s economic growth, bringing more people under the insurance coverage can suffice to ensure greater economic attainment.
However, despite the rapid growth of the insurance sector in the last five years, less than one percent of people are under insurance coverage.
Insurance experts opined that, if more people can be bought under the insurance coverage (both life and non-life insurance), the sector can increase its contribution comparing to GDP, which at present lowest in the south Asian countries.
They emphasize strengthening the activity of the Insurance Development and Regulatory Authority (IDRA) of the country.
IDRA chairman Md Shafiqur Rahman Patwari also stressed on the further development of the insurance sector. On Saturday in a rally he said, “Without the development of the insurance sector, the economy of the country will not be strong”.
According to the World Trade Organisation (WTO), the government has targeted increasing the penetration rate to 4pc by 2021.
Sources at IDRA said neighboring India’s insurance sector contribution is around four percent. They can achieve the target as they have around 750 insurance policies. IDRA is learning new policies of the world and going to introduce such new policies in the country forecasting the development of the insurance sector.
Showing reasons why the country is lagging in the insurance sector, sources added that, in Bangladesh, insurance for vehicles is mandatory. If the authority concerned can make insurance mandatory for other sectors and bring more occupations in the insurance coverage list, the scenario would have been different in the country.
Gokul Chand Das, a member of IDRA, told The Bangladesh Post that, “We are working to increase our competence. We are conducting a campaign to aware people, and informing them that insurance minimizes risks and returns better output when people are in danger.”
“As the country is advancing towards digitalization, we are also aiming to automate the insurance industry. To this end, we are having a project with the World Bank titled ‘Bangladesh Insurance Sector Development Project’ at a cost of Tk 632 crore to develop the insurance “, he added.
“To increase the insurance coverage, we are going to introduce insurance for health, crops, school students, railway passengers. At the same time we are also trying to introduce ‘Building Insurance’, for this we have already submitted a proposal to public works ministry through the finance department”, he further added.
WB report shows, the country’s insurance has progressed to a satisfactory level. In 2017, the size of the industry stood at $1.5 billion, which was $1.1 billion in 2012. Bangladesh is exposed to a variety of risks (weather-related); however, insurance penetration is particularly low.
According to the 7th FYP 2016-20, the vast majority of the population remain untapped by the insurance market across product segments (life and non-life).
As in January 2017, the sector comprised 78 companies operating under the Insurance Act, 2010, of which 32 were life insurance companies, including 1 foreign company and 2 state-owned companies; and 46 were general insurance companies, including 1 state-owned company.
Insurance companies provide: life insurance; general insurance; reinsurance; microinsurance; and Takaful (a cooperative system of reimbursement or repayment) or Islamic insurance. The sector remains small but is gradually expanding, with FDI inflows in the insurance sector increasing from $7.2 million in 2012 to $35.3 million (2017)
According to World Bank (WB) report, to strengthen the insurance regulatory structure and further develop the insurance sector of the country, the World Bank is providing support through the Bangladesh Insurance Sector Development Project (BISDP).
The project aims to strengthen the institutional capacity of the Insurance Development and Regulatory Authority (IDRA), Bangladesh Insurance Academy (BIA), and the country’s two state-owned insurance corporations—Sadharan Bima Corporation (SBC) and Jiban Bima Corporation (JBC)— through modernizing their systems and business practices. It will also help increase the coverage of insurance to protect people’s life and property.
