Contents

General insurance growth slows to record low .............................................................................................................. 2

The dynamics of Bangladesh insurance market.............................................................................................................. 3
Reforming Bangladesh Insurance Industry | daily-sun.com ........................................................................................... 5

General insurance growth slows to record low

Sajjadur Rahman - March 08, 2015
Growth in the general insurance industry slowed to an all-time low of 6 percent in 2014, according to Bangladesh Insurance
Association. Industry insiders attributed the decline to the political unrest of 2013 that prompted businesses to take a
wait-and-see approach to investment.

Though last year was a better year in terms of political stability, entrepreneurs did not invest much, said QAFM Serajul
Islam, managing director of Pioneer Insurance, which managed to grow by 12 percent last year.
All the 45 general insurance companies earned a gross premium of Tk 2,271 crore in 2014, up by 6 percent from that in
the previous year, according to the BIA.
General insurers' premium income grew by 11 percent in 2013, 10 percent in 2012, 15 percent in 2011 and 18 percent in
2010. The last time the industry saw single-digit growth was in 2002.
Of the companies, 20 recorded negative growth in 2014 and 11 saw double-digit growth.
Market leaders -- Green Delta, Pioneer, Reliance and Pragati -- earned more than 36 percent of the industry's total
premium in 2014 and the remaining 41 insurers less than 64 percent.
Farzana Chowdhury, managing director of Green Delta, blamed the poor growth of insurance business on a lack of
awareness. Insurance penetration remains very low -- less than 1 percent -- in Bangladesh, she said.
She also said customer retention has become a challenge as more and more companies are coming into the market.
Green Delta's gross premium stood at Tk 265 crore in 2014, up by only 1 percent from that in the previous year.

Sheikh Kabir Hossain, president of the association and chairman of Sonar Bangla Insurance, blamed the political instability
of 2013 for poor business of the general insurers.
Non-life (general) insurance's business depends on overall investments, exports and imports that were hampered by
political unrest, Hossain said, adding that people are not aware of insurance.
"For example, labourers who go abroad for work are not insured. Even big establishments are also not insured."

The dynamics of Bangladesh insurance market

Mollah Md Nurul Islam - 2013/12/30
Although Bangladesh insurance market is rather small, considering that current penetration rate is low at only 1.0 per
cent, there remains an immense potential for future expansion. The future expansion of Bangladesh insurance market
and increase of insurance penetration in the country lies in tapping the hitherto untapped segments of the market personal lines business in particular which has remained neglected so far. Health Insurance has yet to take off in the way
it has in our neighboring countries. So is the case of micro insurance. Non-traditional insurance is needed to be developed
and marketed. Conducting insurance business in the true spirit of professionalism, bringing in modern management and
sales techniques and new product developments are keys to the future growth and progress of life and non- life insurance
in the country.
The growth of the country's economy, in line with the growth in south Asian countries will also provide an impetus to the
insurance sector by creating new business opportunities. However, this requires sustained efforts by the insurance
industry as a whole, apart from individual insurers introducing new products and improving their services.
Growth :
The growth of insurance premium income in 2012 was 5.59 percent. The combined premium income underwritten by
public and private sectors stood at Tk 86,651 million in 2012.
GDP growth in Bangladesh has been hovering around 6 per cent during the last few years. However the insurance industry
growth have been double digit during the years 2007 to 2010, although this somewhat slowed down during the last two
years. The comparative premium position during the last seven years has been as follows:
Number of insurers and market share :
Insurance market in Bangladesh remains fragmented and extremely competitive due to existence and operation of a large
number of companies, incommensurate with the size of the market. There are 43 non-life and 17 life insurers in the private
sector, in addition to the two public sector Corporations. Recently, the Government has decided to issue licenses to 9 life
and 2 non-life insurance companies. None of the Insurance companies, specially in the non-life sector has a large market
share. The market share of the largest non-life insurance company is 13.59%. The top 7 private sector insurers collectively
account for a market share of 46.54% in the non-life sector.

Insurance penetration :
However, the rate of Insurance penetration (Premium as percentage of GDP) remains stagnant at about 1% as observed
from the last 6 years figures:
Underwriting Results
Bangladesh Insurance market underwriting results have been profitable as can be observed from the market loss ratios
for the last 5 years as under:
Key drivers :
The key drivers for growth of Insurance, namely Economic Growth , Per capita income growth, Investments in
infrastructure, growing Population, segment of young Population, existence of compulsory insurance requirement,
regulatory environment - all exist, but need to be bolstered.
It is very much evident that large segments of population and insurable interests have not been brought under insurance
coverage. The non-life insurance industry is virtually putting sole reliance on commercial and industrial lines of business,
to the extent of possibly 80 to 90% of market premium. Insurance of personal lines business has remained weak mainly
due to negative perception of the public at large of the insurance industry as a whole.
Even for industrial and commercial lines of insurance, business potentials have not been fully explored and tapped.
Evidently, there is customer dissatisfaction over pricing of insurance. Bangladesh still follows a system whereby premium
rates are prescribed by mandatory tariffs. While the system of tariff has been dispensed with in most of the countries of
the world. Perhaps it is still not the time to do so in our country considering the size of the market and not so good financial
strength of the existing insurers. However, the system of tariff does not mean that Premium rates should be pegged at
levels not commensurate with the loss experience. Therefore the tariff rates require to be periodically reviewed and
scientifically adjusted to give a fair deal to the clients.
Challenges of globalisation:
The wind of globalization of trade and commerce has been blowing on all over the world. Barriers of trade and commerce
from one country to another will be relaxed. It is undoubtedly a challenging task for the insurance industry of the country.
Insurance companies from advanced countries will try to enter our market to sell insurance policies both life and non-life
to the public. To face the challenge, our vision and temperament have to be changed, innovative services have to be
introduced, the highest standard of professionalism has to be developed, Government rules and regulations have to be
suitably amended and enforced and market has to be highly disciplined. Only then can our insurance industry compete
efficiently with foreign companies in the domestic market and provide state of the art insurance services to world
insurance markets as well. And in the case we can move from strength to strength in the free and unfettered market of
the century.

Reforming Bangladesh Insurance Industry | daily-sun.com

Mamun Rashid - 28th December, 2015
Bangladesh has too many insurance companies, yet the market remains untapped commented a regional insurance
analyst. While the car is being insured, the passengers or its driver doesnt have proper life coverage, he added.
Corporate governance, human resource quality, product on offer and asset-liability management is very poor in the
insurance industry- he continued.
It was a late afternoon in 2004. Incidentally, I was sitting in front of the then finance minister late M. Saifur Rahman at his
office. He was discussing Bangladesh insurance situation with someone over phone. I could gather from his body language;
he was not quite sure where was our insurance industry going. Once he concluded his telephonic conversation, I made an
uncalled-for suggestion, Sir, our insurance sector should be put under finance ministry, not the commerce ministry, as it
is now. Those who knew Mr. Rahman, were aware of his habit of shrugging off any uncalled-for suggestion. But for
unknown reason, he decided to lend his ears further to me. I continued, Our financial sector could not reap desired result
from the insurance industry, as its regulator didnt have a clear vision about their destination. I cited the example of few
other South East Asian countries, and India too, where insurance sector did play a significant role in creating depth in the
overall financial sector and more importantly financial inclusion.
During the interim caretaker government, Mr. Shamsul Alam, a renowned insurance person along with Bangladesh
Insurance Association and the then Controller of Insurance, were entrusted with the responsibility of doing a review of
our insurance sector and come up with definitive recommendations. As per their recommendations and the development
partners support, the insurance development and regulatory authority (IDRA) was formed and put into action by the
present government.
Through the enactment of Insurance Corporation act VI, 1973 two corporations, namely the Sadharan Bima Corporation
for general insurance and the Jiban Bima Corporation for life insurance in Bangladesh were established on 14th May, 1973.
The government allowed the private sector to conduct business in all areas of insurance for the first time in 1984. The
insurance market now consists of 77 companies, which are: two state owned companies (Jiban Bima Corporation for life
insurance, and Sadharan Bima Corporation for general insurance), 45 general insurance and 30 life insurance companies
in the private sector. 31 insurance companies are listed in the capital market of which eight are life insurance providers.
Government has recently issued license to Indias state owned-Life Insurance Corporation (LIC), despite some reported
reservation from the regulatory agency. Corridor discussions also say, globally renowned life insurance operatorPrudential is also likely to be given a license to operate in Bangladesh. Ministry of finance in liaise with Green Delta General
Insurance Company has launched a pilot project to provide health card to the people in a particular district. There is
discussion about micro-insurance but not much has been done yet.
Bangladesh insurance market is still small with a combined life and non-life insurance market premium of US $960 million.
The industry ranked 76th in the world with a paltry 0.02% share in the global insurance industry. Per capita insurance
spending is only US$ 2.6. Insurance penetration (premium as a % of GDP) remains low at 0.9% (0.7% for life insurance and

0.2% for non-life). The YoY average growth of non-life insurance companies was 12%, and life sector grew at an impressive
rate of 26% over last few years. 36% of the general insurance market is captured by top four market leaders while life
insurance market is dominated by foreign company- Metlife Alico. The non-life market is branch driven and life market is
agent driven. Though there are 57 commercial banks, they are not allowed to sell bank assurance.
While the global insurance market declined, Bangladesh has seen a visible growth over last few years. Growth in the
industrialized countries was 2.8% for life and 0.6% for non-life insurance; however, emerging markets grew at a rate of
4.2% for life and 2.9% for non-life insurance sector.
Rise in premium income of private sector life insurance business both in the 1st year and the renewals was due to
expansion of life business in the country through introduction of micro insurance like Sujhan Bima, Greeho Sanchaya Bima,
Gana Grameen Bima, Loko Bima, Jana Bima, Palli Bima, Islami Khudra Bima, Group Bima, and Wage Earners Group
Insurance scheme etc. The life fund of private insurance companies increased to Tk. 134.93 billion as at 31st December
2010, registering an increase of 28.32%.
The total investment made by the private sector life insurance companies in year 2010 was Tk. 113.14 billion, an increase
of 29.97%. The total assets of the private sector life insurance companies stood at Tk. 152.93 billion as on 31st December
2010, an increase of 29.58%. The number is reported to have crossed Tk. 250 billion in 2014.
The gross premium income of non-life private sector insurance companies increased from Tk. 12.28 billion in 2009 to Tk.
14.88 billion in 2010, a growth of 21.16%. The total investment made by the private sector general insurance companies
in year 2010 was Tk. 17.11 billion. The total assets of non-life insurance companies stood at Tk. 33.37 billion and that of
Shadharan Bima Corporation at Tk. 11.21 billion in 2010.
Though the number has increased largely over the last few years, most of the insurance companies are still struggling.
Some of the life insurance companies have closed many of their rural or sub-district branches and most of the new ones
are limping. With stiff competition from the globally established ones, life is likely to be much tougher for the small and
disorganized ones. Considering what is happening in outside world, especially in other similar or neighbouring countries,
our insurance industry still need to go a long way. There are instances of major corruption with regard to premium
collection, reinsurance, claim settlement and etc. Many owners are putting up false claim and siphoning money from their
own companies through back dated cover note issuance and other evil influence. There are plenty instances of insider
trading, directors manipulation and lack of control. The quality of manpower is quite poor and no major investment or
focus was put in for their development. Few company bosses even tried to harass the regulators under the coverage of
few political masters since they were not dancing according to their tunes. The intelligence agency reports also found
massive irregularities in the major life and non-life insurance companies. A large section of population, non-resident
workers/remittance earners and agriculture are still outside the insurance coverage.

The regulators so far are working well. We need to see them improving their own capacity too. The concerned ministry is
looking at launching a project to improve the overall capacity of the insurance sector. We need to do more to reform the
Bangladesh insurance industry and align them with the regional insurance industry, if not global.