Promoting Insurance to Protect the Insured | 2017-11-01 |

Promoting Insurance to Protect the Insured

Md Harunur Rashid

    1 November, 2017 12:00 AM printer

Promoting Insurance to 
Protect the Insured

Md Harunur Rashid

Are we prepared for life’s changing cycles and unforeseen situations? Here I am just talking about the importance of insurance in Bangladesh.


Below one percent of the country’s population is insured. Insurance penetration has been declining for the past several years, even though the country’s major economic indicators have been growing steadily for over a decade now.

So, it needs to be said that an appropriate vision for this sector is absence in the country. And mass people of our country are not aware about saving, investment, wealth management and retirement funding management by the insurance companies.

In Bangladesh, the overall insurance penetration both in life and non-life sub-sectors stood at 0.72 per cent in 2015, down from 1.13 per cent in 2010, according to Swiss Re (a global reinsurance company).

Data show, penetration rates continued to slide down in the country since 2010. The rate was 1.02 per cent in 2011, 0.95 per cent in 2012, 0.85 per cent in 2013 and 0.70 per cent in 2014. The insurance penetration rate indicates the level of development of a country’s insurance sector.


Whereas globally penetrate rate is 3.8 according to the organisation for economic cooperation and development (OECD).

But the penetration rate is much higher in other South Asian countries and Bangladesh’s peer nations across the world. Insurance penetration was 3.4 per cent in India last year and 1.06 per cent in Sri Lanka. It was much higher in Vietnam, Kenya, Angola and Pakistan, according to the Swiss Re report.

Economically, the insurance sector’s contribution is still below one per cent. On the other hand, the Insurance Development and Regulatory Authority (IDRA) claimed the total insurance premium is 0.90 per cent of Bangladesh’s GDP. A total of 77 insurance companies are operating in the country of which, 46 are non-life and 31 life insurers, including the state-owned one.

The country has a lot of opportunities to penetrate the uninsured. The young generation of our country is almost 47.6 million (30 per cent of the 158.5 million strong population) according to the United Nation Fund for Population (UNFPA) report that we already have in our hand. Also, our GDP growth rate is 7.2 per cent and per capita income is $1602. These are growing up continuously that are very likely to take us to the middle income country status by 2021.

But the problem is that the country’s insurance potentials are yet to be tapped. Lack of awareness among the people about insurance is a major reason behind the poor premium growth. Companies tend to do business with the traditional system and products and they are not investing in research and development to tap new business from hugely unexplored sectors.

Moreover, some of the insurance companies’ tendency not to show their real premium earnings in their books of accounts is the major reason behind the falling penetration rate. The industry insiders blamed a number of reasons for the poor insurance business in the country such as saturated market, falling private investment, declining premium income from multinational companies, no effort to bring untapped sectors under insurance and poor claim settlement records by insurers.

Furthermore, some international insurance companies are operating the traditional products in our country but internationally they are running 200 products. These companies are afraid of marketing new products because of absence of research and development.

Another problem is unemployment rate is huge in our country. Five out of ten graduate students are unemployed in the country according to the economic intelligence unit (EIU) report.

Nowadays the country’s economists think that lack of regulatory approach to developing the sector is another cause driving down the business.


For example, lakhs of households and flats in Dhaka and other big cities are still out of insurance coverage. If 80 per cent of motor insurance, which are done by third parties, come under comprehensive insurance network, the premium will shoot up significantly.

Now what is to be done? Obviously, what we need to do is to set up missions for delivering innovative solutions where every individual’s needs are best met, and to be professional in the way we conduct ourselves and in the counsel we give. Ethically, our policyholders’ interests should be managed with utmost integrity. We should strive to provide favourable outcomes to both our policyholders and shareholders. We need to build an environment of trust and transparency through open and honest efforts. We should also be Proactive in giving our people the skills and knowledge to provide sound solutions to their problems at all times.

At the same time, the Insurance Authority (IDRA) and BIA (Bangladesh Insurance Association) should come forward vigorously to develop new products to bring more people into the sector. Moreover, we should develop public confidence and establish a sound insurance structure and promote greater efficiency within the industry for long term protection of life.


The writer is a Deputy Secretary, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).