Bangladesh poses huge insurance potentials

Rafiqul Islam Azad

Chairman of the Insurance Development and Regulatory Authority of Bangladesh (IDRA), Mohammad Jainul Bari, has stated that Bangladesh can accelerate its growth engine by promoting the insurance sector, which he says has huge potential.

“Our large population is the cornerstone of the insurance sector. Our sustained economic growth has increased the financial capability of people, leading to increased trade and wealth. Bringing these aspects under insurance protection has created significant potential for the development of the insurance sector,” he said in an interview with the Daily Industry.

Referring to the establishment of insurance companies in the private sector in Bangladesh since 1985, he noted that the number of insurance companies has increased in the meantime, but there has been no institutional initiative for the overall development of the insurance sector. As a result, the insurance sector has lagged behind other sectors overall.

However, the IDRA Chairman mentioned that a new era in the insurance sector began with the enactment of the new Insurance Act in 2010 and the formation of the Insurance Development and Regulatory Authority in 2011.

Responding to a question, he identified the main drivers of the insurance sector as the lack of proper awareness among people about insurance and the unavailability of necessary information about it. He also highlighted several issues such as some insurance companies lacking good governance, failure to fulfill insurance claims on time, and reliance on traditional insurance products and agents.

When asked about the reason for the loss of confidence in insurance, he attributed it mainly to long delays in receiving insurance claims, failure of some companies to pay insurance claims, and instances of being cheated by agents.

He mentioned that despite gross insurance premiums increasing by 9-10 percent every year, the contribution to GDP is not increasing as expected. Mohammad Jainul Bari, also a career civil servant who worked as Secretary of the Planning Division and Ministry of Social Welfare before joining the IDRA, stated that historically, the contribution of insurance to the country’s GDP has been low. Moreover, due to the continuous growth of GDP over the last century, the size of GDP has become many times larger than the insurance premium income, leading to a decreasing insurance contribution ratio.

He emphasized that the Insurance Development and Regulatory Authority is playing an important role in the orderly development of the insurance sector and protection of customer interests.

“We ensure accountability, transparency, and good governance by off-site and on-site monitoring of insurance companies’ operations. We aim to regain people’s confidence by eliminating delays in the payment of insurance claims and ensuring the payment of insurance claims,” he further added.

In response to another question, the IDRA boss mentioned that last year, in his address on the Insurance Day program, the Prime Minister directed to ensure the payment of insurance claims.

He attributed the achievement of paying 72 percent of insurance claims in 2023 to IDRA’s regular monitoring and supervision and the cooperation of all concerned parties.