Abu Sazzad: Concentrating the virus pandemic, country’s insurance sector is still facing severe hardship to operate the normal business activities accordingly, mainly due to poor premium collection and drastic fall of investment income.
Actually, the insurance premium is the main income source of the companies, but it dropped by at least 70 percent in the recent months, affecting the sustainability of the companies as well as increasing the risk management of national asset.
The life insurance policy holders were unable to repay their premium for acute financial crisis. On the other hand, stakeholders were failed to open non-life general insurance policy for recognizing the sluggish export and import activities.
Beside, many policy takers are failing to return their maturity amount due to negligence of the insurance companies.
Shiekh Kabir Hossain, President of the Bangladesh Insurance Association, said that insurance business is largely depending on the economic activity which was severely affected for virus pandemic. Achieving a positive growth in the current year is a big challenge as economic activities have suffered a blow since March last. He lamented that the life insurance companies business are still facing serious setback due to failure of door to door visit by the agents.
Khaled Mamun, CEO of Reliance Insurance Company said his company business dropped by 65 per cent in April and May and such trend is continuing in the next months. He expressed his concern for declining the marine insurance significantly in the recent months which is the life force of non-life insurance companies. “As the economic activities has just restarted, we are hopeful to collect regular premium, but, it will be tough to recover the loss of the sector”, he added.
Along with the poor insurance coverage, the lower premium collection is hindering the growth of the sector, said industry insiders. Bangladesh economy embraces huge risk in every sector because the country often faces cyclone, draught and natural calamities even including political assaults and economic issues like inflation, high interest rate, tax policy, deregulation etc. that excavate the risks for the economy. But, the insurance market is not very large in comparison with the degree of risk.
According to Swiss Re Institute, a leading global re-insurer, the overall insurance penetration in Bangladesh stood at a meager 0.57 percent which is the lowest among emerging Asian countries. Insurance penetration was 5.27 percent in Thailand, followed by 4.77 percent in Malaysia, 4.22 percent in China, 3.70 percent in India, 2.42 percent in Vietnam, 1.95 percent in Indonesia, 1.82 percent in the Philippines and 1.15 percent in Sri Lanka. However, Taiwan has the highest penetration rate with 18 percent.
Meanwhile, most of the insurance companies are facing leadership. Out of 32 life insurance companies, almost half of companies have no Chief Executive Officer (CEO) which is hindering the steady growth of the sector.
Insurance Development and Regulatory Authority (IDRA) sources said, currently, some 16 life insurance companies do not have CEOs and some companies are operating their business under the acting CEO. National Life Insurance, Sunlife Insurance, Padma Islami Life Insurance, Sunflower Life Insurance, NRB Global Life Insurance, Protective Islamic Life Insurance, Swadesh Life Insurance, Alpha Islamic Life Insurance, Best Life Insurance, Chartered Life Insurance, Golden Life Insurance, Jamuna Life Insurance and Mercantile Islamic Life Insurance do not have any CEO.
Experts said lack of confidence is one of the major problems for gaining the steady growth of the insurance sector. Skilled manpower is another problem for the sector. They have underscored the need for ensuring the international standard service to increase the premium share as well as to raise the skilled manpower for the said sector.
Due to lack of public trust, the efficient people are not showing their interest to work with insurance sector.
Professor Dr. Md. Main Uddin, Chairman of the Department of Banking and Insurance, University of Dhaka said that insurance has significant contribution on economic growth of a country that facilitates to create a strong capital base and gain economic independency.
The key problems of this sector are deficiency of publicity, lack of qualified human resource, dearth of marketing policies, absence of business ethics, legal complexities, unskilled agents, poor IT support, insufficient return on investment, lack of transparency, lack of public awareness and traditional management.
He laid emphasise for initiating innovative marketing strategies, attracting and retaining talent, developing talent, increasing awareness, adapting information technology (IT), avoiding harmful competition, increasing return on investment, offering diversities and attracting packages, adoption of dynamic management system and implementing effective insurance policy are suggested to overcome the challenges of this sector.
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