Anwar Hossen, who holds an MBA, works for a non-public agency and attracts a month-to-month wage of greater than Tk 60,000. But he has not bought any life insurance coverage though non-public sector workers in Bangladesh should not entitled to any pension assist and his four-member household will likely be in bother if he faces any premature dying.
The motive is he has heard that many individuals do not obtain the proceeds of the coverage from insurance corporations, so he has no belief in the insurance sector.
For all newest information, observe The Daily Star’s Google News channel. He is simply one of many crores of individuals, educated and uneducated, in Bangladesh who haven’t got religion in insurers. As a consequence, life insurance penetration may be very low.
In reality, life insurance penetration has nearly halved in the final one decade though the sector boasts 35 life insurance and 46 non-life insurance corporations.
In 2021, life insurance penetration, measured because the ratio of gross written premium to GDP, was 0.5 per cent, method decrease than 0.94 per cent in 2010, based on information from the Insurance Development and Regulatory Authority (IDRA).
It signifies that most Bangladeshis are uninsured and the insurance premium shouldn’t be rising in preserving with the economy, which has clocked greater than 6 per cent development in the final decade on common.
Insurance gives safety towards monetary loss and insurance protection towards the loss acts as an insulator, notably throughout disaster intervals.
But a majority of individuals in Bangladesh stay outdoors the insurance protection primarily as a result of decrease financial savings charges and a lack of monetary literacy, stated the central financial institution in a report final week.
“A key reason for the low penetration is the discontinuation of policies,” stated SM Ibrahim Hossain, director of the Bangladesh Insurance Academy.
The variety of policyholders has been hovering round 1.75 crore for the previous couple of of years. A 2017 World Bank doc put the quantity at 1.71 crore for 2014, citing information from the International Monetary Fund.
This is as a result of the variety of new insurance policies bought yearly often equals the variety of insurance policies discontinued, Ibrahim stated.
“Some policyholders do not continue premium payments after a few months or years owing to a lack of awareness and lower attention from agents after a year. So, premium income grows at a pace lower than the GDP growth rate.”
The first-year lapse price for personal insurers was 60-70 per cent a few years again, based on the IDRA.
Ibrahim additionally blamed the low funding return in the insurance sector and a lack of product diversification as main causes for the decrease penetration.
Ala Ahmad, chief government officer of MetLife Bangladesh, the one overseas insurance firm in the nation, says the penetration of life insurance is declining as many policyholders don’t proceed paying premiums after shopping for insurance policies.
“This can be improved by better need-based selling, informing people of the benefits of insurance, and making premium payment, claims or maturity settlement simple, hassle-free, timely and transparent.”
In 2020, life insurance premiums dropped by greater than 1 per cent to Tk 9,501 crore in comparison with the earlier 12 months. It rose round 8 per cent to Tk 10,260 crore in 2021, IDRA information confirmed.
Life insurance maintained greater than two-thirds of the entire gross premium and roughly three-fourths of complete belongings in the insurance sector, based on the central financial institution’s Financial Stability Report 2021.
“There is a lack of confidence among the common people about insurance companies because many insurers do not settle claims properly,” stated Jalalul Azim, managing director of Pragati Life Insurance.
Overall, life insurance corporations’ claims settlement ratio decreased to 68.79 per cent in 2021 from 88.32 per cent in 2020, which might not be encouraging for all times insurance policyholders, the BB stated.
There has not been a lot product diversification in the sector, stated Azim, including that the protection of life insurance must go up.
“Had the government made insurance compulsory for all, the scenario of penetration would have been different.”
The World Bank doc additionally cited that almost all insurance merchandise that had been obtainable in Bangladesh suffered a lack of high quality with regard to cost and protection.
Azim provides that many authorities corporations are nonetheless out of insurance protection and the federal government has many properties that aren’t insured as nicely.
Nasir Uddin Ahmed, first vice-president of the Bangladesh Insurance Association, says the individuals of Bangladesh nonetheless contemplate life insurance as a financial savings software.
“But the savings tendency has slowed in the last few years. As a result, premium income did not rise at a faster clip.”
The insurance density ratio, which refers back to the common per capita spending on gross insurance premiums, nevertheless, elevated to Tk 885 in 2021 from Tk 600 in 2013, the BB report confirmed.
Bangladesh’s life insurance penetration is nicely behind the rising market common of three.3 per cent. In 2020, India’s life insurance penetration was 3.2 per cent whereas it was 2.4 per cent in China.
Joy Shaha, a Bangladeshi who lives in Canada, says a resident in the North American nation cannot consider passing a day with out having an insurance coverage.
“It gives me mental peace because I don’t have to worry about myself or my family if I face any disaster,” stated the 35-year-old.
“Actually, none can live a day without an insurance policy in Canada and insurance-related documents are required for every sphere of our lives.”
IDRA Chairman Mohammad Jainul Bari says some insurers lag behind declare settlements so individuals’s confidence in the sector has remained low.
“We are working on it. We have already sat with insurers that are struggling to maintain good governance, settle claims and maintain financial strength.”
“We are working so that the public’s trust level in the insurance sector grows. We are focusing on raising awareness,” he stated, including that the IDRA has arrange a hotline the place prospects can lodge complaints.
