Micro insurance is for bringing the segment of poor and ultra people under the insurance coverage. The term 'Micro' is discussed in many ways in many countries. Basically, 'Micro Finance' is better known in many countries in the world, said Jamal Mohammad Abu Naser, the Chief Executive Officer (CEO) National Life Insurance in an exclusive interview with Bangladesh Post
He said the concept of 'Micro Insurance' is being implemented in our country firstly in non-life insurance, also in the sectors like health, agriculture, credit shield or climate and crop insurance.
Mr. naser said 'Solvency Margin' is being more talked now-a-days. Now question is whether the Bangladesh Insurance industry is ready to fulfill the solvency margin? It’s an internationally more applied area where the capacity of a company is ensured to fulfill the claims of the clients. It has just started in our country in a limited scale.
The senior most and expert Insurance personality of the country made vivid replies to some queries made by Bangladesh Post. The excerpts of his interview is as bellow. Bangladesh Post: We know that insurance is involved in every sphere of life in the countries of developed world but we are lagging far behind in this regard. Would you please brief us the reasons behind?
Jamal Abu Naser: Yes, it’s a reality that Bangladesh is failing to bring all the best practices under the insurance network. We have Insurance Laws of 1938 and Insurance Rule of 1958 and the insurance companies were running in light with these two. New Insurance Law was formulated in Bangladesh in 2010 and came into effect from 2011. Until or unless the guidelines of IDRA being followed properly, the industry would not be in order. Because we have to cover every nook and corner of Insurance. It’s not enough to formulate laws only but it is most essential to implement them strictly with fair practice. Just look neighbouring countries, compliances and international practices. So, a strong SWOT analysis is required to assess Bangladesh market and act according to findings.
You know the vision of Insurance Development Regulatory Authority (IDRA) has been established, just to protect the interest of policy holders. The basic guideline has been need given us to follow for protecting the interest of policy holders. Bangladesh Post: Would you brief us about the historical background of the country's insurance industry?
Jamal Abu Naser: Insurance companies exist in our country for more than 100 years. In 1973 when the general and life insurance companies were amalgamated, a total of 37 companies or agencies came under Life Insurance umbrella and a corporation named 'Jibon Bima Corporation’ was formed. Another corporation named 'Sadharan Bima Corporation' was formed by amalgamating a total of 26 companies in non-life sector. ALICO started functioning in Bangladesh (then East Pakistan) in 1952. After independence of Bangladesh, ALICO’s resumed its total operation in 1974.
Private sector insurance company was introduced in Bangladesh 1985. Where, National Life Insurance Company (NLI) is the first private sector insurance company in the country. After National Life Insurance Company, the second insurance company, Delta Life Insurance Company, started functioning in 1986; then 'Sandhani Life Insurance' in 1990, 'Meghna Life Insurance' and 'Homeland Life Insurance' in 1996. Later a total of 12 companies came into being in 2000 and in 2014 more 14 new companies came into market. Now a total of 32 companies are in operation in this sector. But the fact is, although there are 33 companies in the country, no one mention the name of the number 33 – the 'Postal Life Insurance'.
So we, the 'National Life Insurance Company', is the first and top operating company in the private sector in Bangladesh. Bangladesh Post: Well, then you are thinking that the role of IDRA is more significant in this regard?
Jamal Abu Naser: IDRA is trying to do their best as per the regulation. They are earmarking where it needs to improve, and progress is also marked in some certain areas. As you know, remarkable progress has come in claim settlement by the companies. They are inspiring us to comply with so seriously, but there have connection of law and practices in all these. But if the companies come with more transparency as her IDRA's guideline. The insurance industry will be more successful. Bangladesh Post: Now what about the protection of the interest of policy holders?
Jamal Abu Naser: Yes, progress is in a bit visible now as, because IDRA has strictly directed all the companies to settle insurance claims to the clients. But still we see some companies are failing to come out of their old practice, or there have some mysteries behind this. So I think the regulator is responsible to look into it. IDRA is trying to work actively in this regard. You know, the Life Insurance is a very technical area. It needs people with deep knowledge and experience in Actuarial, IT and Accounts to administer this sector. From administrative perspective, IDRA is more powerful. There are senior officials of the government over there, who are efficient enough. Now the most important issue is 'Lapse. Policy' and 'agents' are turning lapsed, offices are getting closed, and industries are failing to retain agents. If the retention of the field workers were good or if it is possible to provide the facilities of insurance to its clients in true sense, situation could be different. Then dream comes true for Bangladesh. Bangladesh Post: How would you evaluate the latest Insurance Act?
Jamal Abu Naser: The new act has incorporated many new standards in line with global practices. 'Solvency Margin' is being more talked now-a-days. Now question is whether the Bangladesh Insurance industry is ready to fulfill the solvency margin? It’s an internationally more applied area where the capacity of a company is ensured to fulfill the claims of the clients. It has just started in our country in a limited scale. It’s the task of actuaries though a negligible number of actuaries are in our country. As you know, Indian Insurance authority is providing guideline for their Actuaries, Insurance etc. and they are doing this with perfect perception.
The correction that the IDRA is now trying to bring in non-life sector in terms commission, is a very welcoming effort. I believe that if the effort is 15 percent issue is successful it will be a revolutionary success for the industry. Bangladesh Post: What is your evaluation in terms of digitization in the insurance industry?
Jamal Abu Naser: Well, you know the whole world is now running with digitization so we all must have to gain skill on the automation and digitization. It's nothing to be imposed forcefully, you must have all the IT based preparations and data. Now you see the thieves are so cleaver because they are equipped with IT knowledge. In the past, less criminal activities would occur because of lack of IT knowledge but now the scenario is different. Use of digital device, android mobile phone etc. has made many thing easier for the criminals. Life insurance system has been made digital in the global arena through using the facilities of digitization. Bangladesh Post: How do you evaluate the approach of Micro Insurance.
Jamal Abu Naser: Micro Insurance means the insurance for the poor people or the ultra-poor people. Now question is, what is the definition of poor and ultra-poor? Micro insurance is only for bringing this group of people under the insurance coverage. The term 'Micro' is discussed in many ways in many countries. Basically, in many countries in the world the Micro Finance is widely known. Micro concept is being implemented in our country firstly in non-life insurance, in the sectors like health, agriculture, credit shield are or climate and crop insurance.
But, what I think that there have an innovative sense in micro insurance in life sector Bangladesh is the first country to introduce micro insurance. Shafat Ahmed Chowdhury, one of the most celebrated Insurance personality and Actuary of Bangladesh, introduced it. I worked with him as an Actuarial associate in the year 1987. Micro insurance is using the product to entertaining the group by pooling the risk. It's true that the concept of micro insurance originated before 300 to 500 years back. As in the past, you know, Christian people used to help the poor people in their community by collecting subscriptions from affluent segment of the society. So the idea of micro financing came from that time. Later in England during 1900 the micro insurance came first in the form of industrial insurance. It means, the mine or rail workers who used to get wage on weekly basis, had to preserve a part of their weekly wage against the insurance. But during the middle of the Nineteenth century the process was closed due to high cost. But our Actuary Shafat Ahmed Chowdhury tried to apply the experience of UK based insurance operation here. Unfortunately, our people did not nurture it properly.
Now high voice comes out with wide campaign to save the micro insurance. Micro insurance policies has to be brought to retention and try to less the ratio of laps. It is not the matter of one day, it will take time.
