Country wise- Life Insurance penetration (2014) Source: BMI, the -insured.com and PwC analyses
As an emerging economy, Bangladesh is approaching fast with over 8 percent GDP growth rate. The success came from the sectors that had been performing much better since long. But, insurance sector's share in GDP remains low still now. The sector is unable to collect premiums to a great extent that is required for keeping economic wheels running. Any eye-catching works are not being observed in insurance arena though the sector is running with a lot of employees.
For well-being of economy, the sector needs to be upgraded right now. The people with insurance coverage are never frustrated because insurance claims help to cover their economic losses whenever they meet any financial ruin.
Sadly speaking, insurance companies' old-aged products did not draw attractions to the people. I do not clear why the regulator do not feel the necessity of insurance for man's life. Bangladesh lags behind in respect of widening insurance coverage compared to other nations. Insurance for every citizen in developed economies is given top most priority.
So many years of independence, the sector is running with poor respond from citizens of all classes. It is not accepted at all. The key objectives of insurance are providing life insurance benefit to the people at a competitive cost, mobilizing savings through various schemes, offering products for maximum returns at minimum cost, creating funds for economic development through innovative life insurance schemes.
There are 45 general insurance companies and 31 life insurance companies in Bangladesh. In addition, the country has two state - owned insurance corporations - one in the general segment and other in the life segment. Life insurance constitutes a 73.5% share of its insurance market and non-life insurance a 26.5% share. In 2017, non-life insurers earned a gross premium income of Tk 2908.1 crore and life insurers Tk 8,203.1 crore. The people seldom show interest towards insurance schemes and policies. The sector has failed to attract the customers with their schemes.
Among South Asian countries, Bangladesh has the lowest premium per capita. According to the World Bank, (1999 to 2004) the average gross premium income as a percentage of its GDP was 2.7% in India, 1.27% in Sri Lanka whereas only 0.51% in Bangladesh. Globally Bangladesh ranks 86th out of 88 countries in terms of its premium per capita (US dollars) and 85th out of 88 countries in terms of its premium as a percentage of its GDP.
Health insurance in Bangladesh in both private and public sector is virtually non-existent. The percentage of GDP spent on health is only 2.64% - the lowest in South Asia. Close to 9% of households pay huge healthcare payments and 7% have to finance their healthcare costs by selling their assets.
In 1973, two state-owned insurance corporations- one is life and another is non-life - emerged aiming to economic progression. Afterwards, privately-owned insurance companies begin to start their operations in full swing for same purpose. But, growth rate of premium along with number of customers is in sorry state in the insurance industry. The sector has yet to create customers' confidence. The features of insurance schemes and policies are totally disliked by the people indicating that the sector needs to be vibrant more to join the race of other nations.
The world's regional distribution for life insurance premiums for 2015 shows that 30.8% in North America , 30.3% in Western Europe, 19.6% in Mature Asia pacific, 11.6% in emerging Asia, 3.6% in Latin America, 1.6% in Eastern Europe, 1.3% in MENA and 1.2% in Sub Saharan Africa. In insurance sector, North America and Western Europe are much advanced compared to other regions.
Premium growth depends on the demand for insurance products. According to OECD, in the life sector, the growth rate of gross premiums ranged from 29.9% (Russia) to -13.0% (Ireland) in 2018. Moreover, Latvia recorded the strongest increase in non-life gross premium in real terms in 2018 (18.9%) followed by Sweden (12.7%), Estonia (12.4%), Egypt (10.1%).
A lot of facts and figures in my piece tell that the insurance industry in Bangladesh could not reach a good position. But, the need for demand among people hast to be created anyhow with revising schemes and policies. Why the sector lags behind is completely unknown to me.
The sector needs a good push from state side. Insurance Development & Regulatory Authority (IDRA), the watchdog of country's insurance companies, has to scale up its supervision and monitoring for economic wellbeing. What is worrying that jobs in insurance sector did not draw attention to the graduates? The talent figures never dream to start jobs in insurance sector fearing sudden kick out.
I think insurance regulator has to play many crucial roles in bringing the sector as reliable to all through reforming many. The sector ought to be turned into booming one. For massive scale employment generation the sector is badly needed to be flourished shortly.
The writer is a banker and
analyst of Economic Affairs. Email:[email protected]
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