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Following Bangladesh's independence, the insurance sector remained dormant for two years. However, in 1973, the government initiated operations under the banners of Jibon Bima
Corporation and General Insurance Corporation. Since then, over the past 51 years, the country's economy has witnessed significant growth, accompanied by a remarkable expansion in the number of insurance companies, which now stands at 82. This represents a 41-fold increase in the number of insurance companies.
In the 54th year of independence, insurance companies have collectively invested Tk 51,266 crore in the country's economy.
Stakeholders point out that despite the potential for growth, the insurance sector has faced challenges such as reluctance among company owners and officials to honor insurance claims, as well as instances of corruption and irregularities. These issues have hindered the establishment of trust among the general public. Consequently, the insurance sector's contribution to the country's economy remains below 1 percent of the GDP, a figure that should ideally be much higher.
In response to these concerns, Mohammad Jainul Bari, Chairman of the Insurance Development and Regulatory Authority (IDRA), acknowledged that the insurance sector operates in shades of gray. He noted that prior to assuming the role of IDRA chairman, he had heard about various challenges within the sector.
He further emphasised, "Since assuming this responsibility, I have gained firsthand insight into the current situation. I am firm in my belief that the development of the insurance sector is crucial for overall economic progress. By examining developed economies, it becomes evident that the insurance sector has significantly contributed to their extensive investment efforts. The life fund, in particular, serves as a highly efficient avenue for low-cost, long-term investments. However, we have not been able to elevate the insurance sector in Bangladesh to that level. There is a notable lack of nurturing in this sector."
As per the latest data from the Insurance Development & Regulatory Authority (IDRA), the regulatory body overseeing insurance companies, the number of life insurance policies in Bangladesh, with a population of approximately 170 million, stands at a mere 73,74,000.
The organisation asserts that the number of beneficiaries under these policies amounts to 1 crore 64 lakh people, indicating that even 10 percent of the total population remains uninsured. Despite the presence of 36 life insurance companies in the country, encompassing both government and foreign entities, the coverage gap persists. Additionally, according to the latest data, there are currently 12,14,886 general insurance policies in effect in Bangladesh, despite the operation of 46 companies in this sector.
Around 25 percent of India's population, is covered by life insurance policies.
According to Forbes, out of the 140 crore people in Bangladesh, 51 crore 40 lakh individuals now have health insurance coverage. In contrast, the United States, the world's leading economy, has approximately half of its population covered by life insurance policies. Recent survey data indicates that approximately 92.10 percent of its population has health insurance coverage.
According to the Insurance Development & Regulatory Authority (IDRA)'s 2022-23 annual report, insurance penetration in neighboring India stood at 4 percent, while in Malaysia it was 5 percent. The rate was 1.90 percent in the Philippines and 2.30 percent in Vietnam. However, in the same year, insurance penetration in Bangladesh was only 0.40 percent, compared to 0.55 percent in 2018. This indicates that premium income as a proportion of GDP has been consistently decreasing since 2018.
The disparity between Bangladesh and other countries in terms of insurance coverage is further highlighted by another statistic from the Insurance Development & Regulatory Authority (IDRA). As of 2022, Bangladesh ranks 36th globally in terms of GDP, yet it occupies the 60th position in terms of insurance penetration. In contrast, Malaysia ranks 40th globally in GDP but stands 31st in premium income. Similarly, Vietnam ranks 41st in premium income while holding the 37th position in terms of GDP. This discrepancy underscores the significant gap in insurance coverage between Bangladesh and these other nations.
Since its inception with two companies in 1973, the insurance sector in Bangladesh has expanded significantly, reaching a total of 82 companies by December 31, 2023. The combined assets of these companies have grown to Tk 72,576 crores. Moreover, these insurance companies have collectively invested Tk 51,266 crores in the country's economy, contributing to its overall development and growth.
Md. Kazim Uddin, the CEO of National Life Insurance Company Ltd., the first private company in the life insurance sector, highlighted the transformation within the industry. He explained that in the past, insurance companies used handwritten receipts for premium collection, causing inconvenience for customers. However, with the advancement of technology and the transition to a digital Bangladesh, insurance operations are now also becoming digital. Digital receipts are issued immediately upon premium payment, with customers receiving SMS notifications on their mobile phones. Additionally, the Insurance Development & Regulatory Authority (IDRA) provides policy information to customers via SMS, allowing them to track their premium accumulation. This digitisation not only enhances convenience but also increases trust and reliability among customers, thereby strengthening the overall credibility of the insurance sector.
Messenger/Disha
