Fostering Insurance Awareness among the Masses:

Challenges and Opportunities1

Professor Dr. Nazrul Islam
Pro-Vice Chancellor, Canadian University of Bangladesh
Email. nazrulku@gmail.com
1. Background
The economic growth of Bangladesh is now remarkably higher compared to any other time
of the country. This has been observed primarily in last few decades in Bangladesh.
According to World Bank Report, the Gross National Income (GNI) tremendously
increased from $100 to $1,220 between 1972 to 20152. Now, Bangladesh is trying to
achieve its goal to be a middle-income country by 2021 by reaching steady growth of 8%
per year (Bhattacharya, & Khan, 2018). Since Bangladesh is a country with full of natural
calamities and risks in economic development, insurance industry has got very high
potential in this country. It is the most potentials place for insurance business in the world
due to its vulnerable economy and God gifted disasters. In the report, Lloyd's identified the
underinsurance or insurance gap, which depicts the value of assets at risk not covered fully by
insurance policies in Bangladesh. Among the 43 countries covered in the report, Bangladesh has
the largest insurance gap, which stands at $5.50 billion, or 2.10 percent of the country's gross
domestic product (GDP)3. Insurance premium per capita in Bangladesh is just USD $8, a statistic
that masks the fact that most people do not have insurance at all (Vaughan, & Vaughan,
2007). Research also shows that (Lloyd’s Report 2019) showed that 1% rise in penetration
in insurance sector of Bangladesh can contribute to as much as $4.4bn in savings4 in the
country. In comparison to the trend of per capita income $1602 as of 2017, the insurance
penetration rate5 in Bangladesh is 0.70% in global comparison during 2016 which is very
low compared to other countries of the world. Out of which only 0.2% consists of life
insurance in Bangladesh. This very low penetration rate in insurance sector is very alarming
for a country having 170 million people. On the other hand, the highest insurance
penetration in the world is at 18%, belonging to Taiwan. According to the World Bank
statistics, only 4 out of 1,000 people in Bangladesh have life insurance policies which is
one of the lowest in the world.

Insurance is one of the old businesses in Bangladesh started during British rule in India with some
insurance companies both life and general in nature. It gained momentum in East Pakistan during
1947-1971, when 49 insurance companies were in the market with both life and general insurance
schemes6. These companies were owned British, Australian, Indian, West Pakistani and local
                                                            
1
This paper was presented at the seminar on “Training Workshop on Raising Awareness Regarding Insurance”
organized by “Bangladesh Insurance Sector Development Project (BISDP) held on 20 June 2019, Thursday at 9:00am
in the Conference Room of Hotel Shaikat, Station Road, Chottogram, Bangladesh. 
2
https://www.dhakatribune.com/opinion/op-ed/2017/11/29/long-way-go
3
https://www.thedailystar.net/business/news/bangladesh-most-underinsured-nation-1674145
4
https://www.dhakatribune.com/opinion/op-ed/2017/11/29/long-way-go
5
Penetration rate indicates the level of development of insurance sector in a country. Penetration rate is measured as
the ratio of premium underwritten in a particular year to the GDP.
6
http://en.banglapedia.org/index.php?title=Insurance 

Page 1 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

entrepreneurs. Ten insurance companies had their head offices in East Pakistan, 27 in West
Pakistan, and the rest elsewhere in the world. The government of Bangladesh nationalized
insurance industry in 1972 by the Bangladesh Insurance (Nationalization) Order 19727. By virtue
of this order, except postal life insurance and foreign life insurance companies, all 49 insurance
companies and organizations transacting insurance business in the country were placed in the
public sector under five corporations such as, The Jatiya Bima Corporation, Tista Bima
Corporation, Karnafuli Bima Corporation, Rupsa Jiban Bima Corporation, and Surma Jiban Bima
Corporation. After nationalizing the insurance industry, the enactment of Insurance Corporation
Act VI, 1973 was formulated and two corporations namely Sadharan Bima Corporation (SBC) for
general insurance and, Jiban Bima Corporation for life insurance were established. SBC was acting
as the sole insurer of general insurance till 1984. Between 1985 to 1988, private general insurance
companies were allowed by the Bangladesh government. A total of 16 private general insurance
companies were registered at that phase. In 1996, again eight private general insurance companies
were registered in Bangladesh. At the third phase, 18 private general insurance companies came
into operation between 1999 and 2001. The general insurance market in Bangladesh now consists
of 43 private sector insurance companies and 1 state owned insurance company. Insurance
Corporation (amendment) Act 1990 provided that 50% of all insurance business relating to any
public property or to any risk or liability appertaining to any public property shall be placed with
the SBC and the remaining 50% of such business may be placed with this corporation or with any
other insurers in Bangladesh. But for practical reason and in agreement with the Insurance
Association of Bangladesh SBC underwrites all the public sector business and 50% of that business
is distributed among the existing 43 private general insurance companies equally under National
Co-Insurance Scheme.

Currently, Bangladesh’s insurance sector comprises 45 general insurance companies and

31 life insurance companies which is a significant potential industry in Bangladesh. In
addition, Bangladesh has two state-owned insurance corporations - one in the general
segment and the other in the life segment 8. Now, life insurance sector of Bangladesh
constitutes 73.50% share of its insurance market and non-life insurance 26.50% market
share. Micro-insurance and Islamic Insurance (Takaful) are also a part of this insurance
sector of Bangladesh. In 2017, non-life insurers earned a gross premium income of Tk.
2,908.10 crores and life insurers Tk. 8,203.10 crores. The assets of all the insurance
companies stood at Tk. 44,328 crores by the end of 2016. Investments in both life and non-
life insurance companies have grown significantly during the period between 2006 and
20149. Hence, the insurance sector of Bangladesh has got potentials but has been suffering
from barriers which are internal and external in nature and primarily concerned with the
customers and the people of the country.

2. Problems of Insurance Industry in Bangladesh

In Bangladesh, there are number of factors that hinder people to buy insurance policy in
Bangladesh. The factors are primarily concerned with the marketing, branding, internal
                                                            
7
http://en.banglapedia.org/index.php?title=Insurance
8
https://www.dhakatribune.com/opinion/op-ed/2019/04/28/transforming-our-insurance-sector
9
https://economictimes.indiatimes.com/industry/banking/finance/insure/non-life-insurers-witness-13-per-cent-rise-
in-premium-in-fy19/articleshow/68951154.cms?from=mdr

Page 2 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

management, and low importance of the regulatory authority10 of the country. The problems or
barriers or the factors hindering the development of insurance industry in Bangladesh are discussed
below.

i. Lack of Diversified Insurance Products

In Bangladesh, insurance companies do not offer diversified products for their customers
(Shi, Baranoff, & Sager, 2016). As a result, all types of people are not covered in the
insurance schemes of the companies. For example, agricultural insurance, business
insurance, health insurance, education insurance, etc. are ordinarily not covered by the
insurance companies. Recently, agricultural insurance is included in the national agenda
by the government. Every year, Bangladesh faces natural calamities that create shocks for
the farmers for which insurance can be used to protect their risks of losses. Therefore,
insurance can help farmers significantly in managing their problems. For example, cyclone
accounted for 20% of the government’s expenditure in 2007. Hence, reinsurance can play
an important role in reducing the financial impact of disasters in this regard in the country.

ii. Absence of Health Insurance Schemes

There is hardly awareness of health insurance among 170 million people of Bangladesh.
Health insurance in both public and private sector of Bangladesh is virtually non-existent11.
The percentage of GDP of Bangladesh spent in health is only 2.64% - the lowest in South
Asia. A few people (9%) of the households of Bangladesh pay healthcare payments while
7% of them finance their healthcare costs by selling their valuable assets. Healthcare policy
can help to improve the situation.

iii. Lack of Alternative to Pension Scheme

In Bangladesh, rural people lives hand to mouth and are in acute poverty. After retirement
security, pension schemes are available in the Government sector. Government job holders
after their retirement can rely on pension for family support which are not present in private
sector. Research shows that the life expectancy of Bangladeshi people is increased in recent
years and elderly people are becoming helpless due to no financial security12. Hence, to
relax the burden on government funds, pension scheme of insurance can help this
vulnerable elderly segment people of Bangladesh.

iv. Lack of Translation of Microeconomic Growth into Insurance

There is a potential to translate microeconomic growth into insurance. In recent years,

microeconomic growth in Bangladesh seems promising. Asia is set to represent a large
share of overall life insurance premiums between 2016 and 2025, rising from 11.6% to

                                                            
10
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3082125
11
https://www.dhakatribune.com/opinion/op-ed/2019/04/28/transforming-our-insurance-sector
12
 https://www.thedailystar.net/business/news/increase-govt-schemes-not-the-solution-lack-variations-savings-
schemes-1775917 

Page 3 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

21.7% 13. Bangladesh can capture some of this growth in life sector of insurance. According
to a report published by the Boston Consulting Group (2015), 3 out of 5 cities of
Bangladesh will see the emergence of more than 100,000 people in the middle and wealthy
classes in the upcoming decade (Perspectives, B. C. G. 2015). This could easily be translated
into a higher demand for insurance products.

v. Lack of Bank Insurance Scheme14

Bank assurance means partnership between an insurance company and a bank where the
bank sells insurance products which is also a growth opportunity for the insurance
companies in Bangladesh. Bank insurance helps protect individuals who deposit their savings
in banks, against commercial bank insolvency. It can simultaneously result in mutual benefits
for banks, insurance companies, customers and regulatory bodies of Bangladesh15. Banks
usually have the pre-existing technological and human resources to provide the best
customer services. Hence, it is likely to be more convenient for customers to pay premiums
and withdraw cash by their ATM cards from the bank.

vi. Diversification of Product Range of Financial Institutions

Financial institutions can also diversify their product range to reduce the systematic risk.
In this situation, insurance can help to reduce the risk. Selling a range of financial services
to customers can be in banks’ best interests since insurance products would give them a
stable source of income. Hence, attachment of insurance with the diversified products of
financial institutions can help developing insurance sector of the country.

vii. Lack of Contribution to Fundamental Macroeconomic Sector

Fundamental macroeconomic sector indicators including GDP growth, unemployment and

foreign direct investment (FDI) etc. could also be strengthened by the insurance sector.
Insurance can promote growth by providing guaranteed access to liquidity via insurance
coverage. If increased savings are channeled to various financial savings instruments
including insurance, capital markets stand to benefit greatly. Moreover, a resilient
insurance sector can help to curb unemployment of the country.

viii. Lack of Regulatory Reform

Regulatory measures in insurance sector still with traditional flavor. It must have some
principal aims. Insurance-related regulations should stop the sale of unfair policies and
mispricing of the policies to consumers. This is especially important because insurance by
its nature is a complex product, whereby vulnerable consumers can be persuaded to opt for
complicated benefit structures, tempted by complicated policy language which are not
understandable by the general customers. Regulators should also take steps to prevent
profitable consumers being selected by insurance companies. Regulators should also
                                                            
13
https://www.dhakatribune.com/opinion/op-ed/2019/04/28/transforming-our-insurance-sector 
14 https://www.investopedia.com/terms/b/bankinsurance.asp 
15 https://www.dhakatribune.com/opinion/op‐ed/2019/04/28/transforming‐our‐insurance‐sector 

Page 4 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

account for insolvency-related risk and should ensure there is a satisfactory level of capital
reserves to protect customers in scenarios where they cannot collect claims when they need
it.

ix. Lack of Understanding of the People about the Insurance

Insurance awareness of Bangladeshi people is very poor and agents are also not skilled enough to
make the people understand the importance of insurance. These agents cannot perform their jobs
properly to make the people aware of life insurance due to lack of training. They are also
demotivated in selling the policies. In addition to affordability, some of the reasons people choose
not to take out insurance include little understanding about the value of insurance and a lack of
trust on insurance companies. That’s why, lack of trust on insurers, little knowledge about
insurance and zero product diversification have caused the insurance premium to remain low in
Bangladesh. This might be the main reason for not buying the insurance policy by the people of
Bangladesh.

x. Unethical Practices of the Insurer

Unethical practices of the insurers are the major hindrances to develop insurance industry in
Bangladesh. Hence, insurance is perceived by the people as fraudulent business (Mamun, 2015).
Sometimes, insurance companies harass policy holders at the time of claim settlement and do not
pay the damage or insured amount after death or maturity. They show different causes in order to
make delay to return back the money to their customers. Sometimes, they would like to pay less
than the desired amount by creating various circumstances such as, they try to say that the disaster
of the subject matter of the policy is not responsible due to their activities and so on. Hence, they
cannot rely on the insurer that they will receive the insured money if there is accident. Sometimes,
some field officials also create some illegal acts which are contrary to the belief of the clients.
They often try to give false or inflated information to the people for selling the insurance policy.
And these kind of illegal acts create bad reputation to the insurance company and hindrance the
overall insurance business in the country. Some insurers give up to 70% commission on the
premiums collected by the agents to boost the company's income which is clearly unethical.
According to rule, company cannot give more that 15% commission to the agents. Hence, the
insurance penetration remained low because of these unholy practices of the insurers.

xi. Lack of Government Initiatives and Importance on Insurance

Insurance is not a priority sector of Bangladesh government as it contributes a very low portion of
GDP of the county. Moreover, lack of government initiatives to remove unfair and unethical
practices also evident. It is opined that to bring all properties and businesses under the insurance
coverage government is responsible (Khan, & Uddin, 2013). It is popularly perceived that if a
company tries to uphold the image of the insurance to the public the fruit will be enjoyed by other
companies. Therefore, this initiative can be taken by the government for the overall development
of this important industry in the country.

Page 5 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

xii. Poor Knowledge of Insurance Agents

In Bangladesh, marketing and branding of insurance activities are absent. Companies do not have
budget for this purpose. Insurance marketing is to be done by a group of smart and trained people
called agents which are not performed by them. Marketing of insurance is also hampered in the
remote areas of Bangladesh where the agents are appointed from respected locality who are not
trained at all. This is because of educated young people are seemed to be reluctant to become
insurance agents as it is still not an established or acceptable profession in Bangladesh society.
The payment given to the agents is also very low and unreasonable which is perceived as minimum
by them. Companies do not focus on the payments to the agents and do not allocate budget for it.
Therefore, such agents cannot play productive and efficient role in convincing prospective
insurance policyholders.

xiii. Illiteracy of the People

Illiteracy of the people of Bangladesh is another problem that adversely affects the marketing of
insurance in the country. Illiteracy leads one to think that the insurance is nothing but fraud or
deception and has no value in life. They cannot think rationally as they do not know what is
insurance and what is its importance for giving security in their lives for future.

xiv. Religious Superstition of the People

The people of Bangladesh are religious minded and are unable to connect insurance with their
religions. Hence, insurance marketing is barred by the religious attitude and highly anchored
behavior of the people of Bangladesh. (Reza, & Iqbal, 2007). Religious people believe that the
future is uncertain, it is at the hand of Allah - The Almighty. They do not think it is necessary to
buy life insurance policy for covering the risks of their lives.

xv. Low Savings of the People

Bangladesh is still a developing country and income level of the people is not high. Hence, they
have very small saving potentials and thus have less disposable income for buying insurance policy
and continuing the policy in the long run. Almost the whole income is used to maintain their day-
to-day lives. Thus, people are left with little amount that may not have deemed to be sufficient for
the payment of premiums. This factor discourages many people to buy life insurance policy.
Sometimes, policyholders cannot continue with their policies due to shortage of funds.

xvi. Lack of Marketing Policy of the Companies

It is said that marketing is the first function of any business company to survive and grow in future.
Insurance companies of Bangladesh hardly have budget for marketing and promoting their policies
or services. One of the major problems of these companies is lack of realistic marketing policy.
Management of the company does not take initiative to expand their markets. They provide little
amount for advertisement which is not sufficient for developing insurance business where there is
a negative perception of the people about it.

Page 6 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

xvii. Insurance Policy is Sold and Bought

In Bangladesh, insurers sell the policy to the people by using ‘push method’ which is often not
accepted by the general people. But for a business, customers are to be motivated or induced to
buy the product by the advertisement or the services which are absent in Bangladesh. Therefore,
it can be said that “insurance policy is sold not bought by the customers” in Bangladesh.

3. Challenges for Creating Insurance Awareness

On the basis of the problems of insurance industry in Bangladesh, the following challenges
are identified for creating awareness about the insurance among the people of Bangladesh.
These challenges are twofold such as, controllable challenges and uncontrollable
challenges. Controllable challenges are at the hands of the companies and uncontrollable
challenges lie with the regulatory bodies of the county.

i. Lack of Trust between Insurer and the Customers

It is said that the main principle of insurance is “Utmost good faith” which is absent in this
industry. Lack of trust between insurance companies and their customers is very high
because the companies often engage in highly speculative investments in this business in
Bangladesh16. Claim-settlement related problems are also a serious problem in this sector.
In addition, insurance people are not smart enough to provide appropriate services to the
customers that can create trust between the company and the customers.

ii. Uneven Income Distribution in the Society

Bangladesh is a country that suffers due to uneven income distribution. Majority of the
people of this country are poor and they do not have disposable incomes and are unable to
afford insurance policies. From a macroeconomic perspective, this is a serious problem for
the development of insurance industry in Bangladesh.

iii. Poor Management and Technological Capability of the Companies

Now a day, every business has developed substantially in Bangladesh due to severe
competition and the pressures of the customers. Insurance sector is different in this regard.
In this industry, competition is very severe and the customers are unwilling to buy the
policies. Globally, the insurance sector has been undergoing digitization and platforms are
being created to optimize customer service and streamline the processes which is absent in
Bangladesh. In Bangladesh, there has been minimal utilization of modern technologies,
websites, digital marketing, inefficient management of the processes and the agents are
observed.

                                                            
16
 https://www.thedailystar.net/business/news/insurers‐premium‐income‐goes‐1722646 

Page 7 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

 iv. Lack of Access to Accurate and Up-to-date Demographic Statistics

Demographic statistics are very important for the insurance companies in order to design
their marketing policies. But in Bangladesh, insurance companies do not have access to
accurate and up-to-date demographic statistics to use for actuarial computations. In this
situation, regulatory reform in insurance industry can stimulate the growth of insurance
business in Bangladesh.

v. Clarity and Integrity in the Policies and Selling Practices

The capital for selling the insurance policies is the clarity and the integrity of the policies
and the selling practices. Insurances happen to be fairly more complex in nature than other
products and services. Unfair policies and malpractices can destroy the image of the
company to the customers 17. This could be happened due to lack of technical knowledge of
the sells forces and the hidden policies of the companies.

vi. Lack of Customer Orientation and Exposure

Lack of customer orientation is another challenge for the insurance companies in

Bangladesh. This is due to lack of research and development endeavor of the companies to
identify the different and exact customers. Hence, research and development will be
required in the technical and financial paradigms to bring about more innovative features
to provide insurance solutions, an increase in insurance awareness initiatives, and much
importantly, a robust program for extracting and refining a pool of innovative and sincere
professionals. Another main problem in the country is that the media is unconcerned to send the
right message regarding insurance to the people. As a result, a large portion of population is
completely unaware about the insurance policy.

vii. Public Ignorance about the Insurance

Majority of people especially in rural areas are left outside the insurance coverage and they are
also illiterate. This mainly results from the unawareness among the people. Even a large portion
of people don’t have the minimum idea of insurance in Bangladesh. People are also not aware of
the benefits of the insurance and a great number of people believe that insurance business is
nothing but cheating and presume that insurance policy is quite unnecessary. This negative attitude
from the people is lessening the importance of absorbing insurance policy in a large extent in
Bangladesh.

viii. Central Location of the Insurance Companies

Most of the insurance companies in Bangladesh are located in urban areas and there are few
branches in rural areas that do not cover the whole country. We shall have to keep in mind that the
message of the benefits of insurance is to be reached to the 17 crore people of the country. People
think that they might have better scope for performing their businesses as the economic condition
of the urban is better than the rural areas. They don’t think that the large number of the population
                                                            
17
 http://www.wriec.net/wp‐content/uploads/2015/07/1I3_Mamun.pdf 

Page 8 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

reside in rural areas and if branches are expanded in rural areas then the business can thrive if
proper motivation policy is taken to aware the mass people of the rural areas. Therefore, this
centralization policy acts as an obstruction for the growth of insurance business in Bangladesh.

ix. Poor Economic Conditions of the People

The people of Bangladesh is poor and they are disposable income is very low to buy insurance
policy. All of these people fight hard to earn their livelihood and are marginal in relation to the
expenditure with the income. It is quite impossible for them to save some money for future need.
Therefore, they are not able to give the amount to the insurer. The number of people who can bear
the premium to the insurance company is very few in this regard. Therefore, the overall poor
economic condition of the people of Bangladesh is creating obstacle to flourish the insurance
business in Bangladesh

x. Poor Financial Position of the Insurance Companies

Insurance companies have not been developed in Bangladesh in a healthy condition. Most of the
companies face financial problems for doing their businesses. Recently, government tried to take
initiative to close some of the insurance companies because they are not maintaining the minimum
standards. They are investing their money in poor securities and business which is vulnerable
regarding getting back the money with profit. As a result, most of the insurance companies are
suffering from loss years after years. Due to poor financial condition of the insurance companies,
they are also unable to expand their branches which is a barrier for the growth of insurance business
in the country.

xi. Too Much Complexity in Insurance Policy

For buying an insurance policy, a customer has to perform a number of rules and regulations which
must be compelled by the insured. These rules are also very much complex to follow. Therefore,
the people are discouraged to buy insurance policy because they think that the complexities will
create extra pressures on their mind which may hamper other jobs.

xii. Lack of Marketing Policy and Budget of the Companies

The major problems of insurance companies in Bangladesh is lack of marketing policy and
marketing budget. Management do not take initiative to increase their marketing and branding
activities for its expansion. They spend small amount for the advertisement and branding activities
of the companies.

xiii. Lack of Motivational Program for Public Awareness

Research shows that the people of Bangladesh are not motivated by the company to buy insurance
policy for safeguarding themselves against any kind of risk or accident. It is perceived by them
that the insurance policy cannot make their life risk free. Hence, the people are not motivated to
think about the insurance arrangements. In addition, companies are not initiating any public
awareness program so that the public can be motivated to buy the insurance products.

Page 9 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

 xiv. Lack of Qualified officials

Marketing agents are the main people of the insurance companies in Bangladesh. The companies
perform their activities by recruiting the agent and try to convince the people to buy the policy. In
most of the cases, agents are not properly trained and they don’t know the right process to
convenience potential people to make their policyholders. Therefore, the field level agents are
unable to fulfill their targets and sometimes act as constraint in the insurance business. There are
not enough training centers to provide proper training regarding insurance activities for the
officials of insurance companies in Bangladesh.

xv. Complexity and Delay in Claim Settlement

The people of Bangladesh have an image that the insurance companies will not pay back the money
when the policy will be matured. It is due to the failure of the companies to properly settle
customers’ claims on time. There is an uncertainty about getting insurance claims after the maturity
of the policy. More than 83.40% customers of insurance industry had opined that insurance
companies made delay in settlement of claims. This problem makes insurance business unpopular
to the people.

xvi. Philosophy of the Insurance Companies

Insurance companies of Bangladesh sell the policy to the customers. They do not induce the
customers to buy the policy. This became a philosophy of the companies in this industry of
Bangladesh. But the insurance industry will not expand and the customers will not buy the policies
if they are not motivated. Therefore, the philosophy of the insurance companies is to be changed
to improve the situation.

4. Prospects of Insurance Industry in Bangladesh

Although, there are many good signs and potentials of insurance business in Bangladesh, the
factors that can facilitate the insurance business in Bangladesh are discussed below.

i. Higher GDP

The GDP of our country is continuously increasing than the previous year’s which results in
increase of per capita income of the people of Bangladesh18. So, this growing GDP and income
has very high prospects for insurance business in the country. The major problem in this regard is
the incapability of the people to pay the premium for long time charged by the insurance
companies. With the growth in the income, more and more people are now willing to buy insurance
policy for safeguarding themselves from any danger or risk in future.

                                                            
18
 https://en.wikipedia.org/wiki/Economy_of_Bangladesh 

Page 10 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

 ii. Increased Population

There is a big opportunity lies ahead for the insurance companies of Bangladesh due to the
population increase. Although, most of people of Bangladesh live under ‘poverty line’ and they
want to avoid insurance policy, but the number of potential policy holders in Bangladesh is
growing with the increase of the population19. The growth of population opens greater scope for
every kind of insurance business that results in growing prospects for insurance in Bangladesh.

iii. New Insurance for New Business

There are so many new businesses starting every day and manufacturing sector is booming with
global demand. Every business is to be insured under an insurance company to protect its company
from any kind of risk or accident20. Therefore, growing industry, mill, factories are creating better
scope for the insurance companies to flourish their businesses. Insurance companies are at the
advantageous position in this regard.

iv. Micro Insurance

Micro insurance can be a great prospective area for the insurance business in Bangladesh (Ahsan,
Khalily, Hamid, Barua, & Barua, 2013). Most of the people of Bangladesh are unable to bear costly
and long term insurance policies. Micro insurance can be provided to individual or to small
business owners for micro risk coverage against little insurance premiums and with easy terms and
conditions. When the people will afford to minimize their risks at a lower price, they will take that
opportunity and will become positive to buy it. This can cover a huge portion of the society who
can be a prospective target market for the insurance business in Bangladesh.

v. Scope in Non-Traditional Sector

Now-a-days, along with traditional insurance services, the insurance companies can offer various
non-traditional insurance services to their customers. Target market of the insurance companies
may expand and then the companies will be able to offer different types of non-traditional
insurance services such as, health insurance, personal accident insurance, travel insurance,
burglary insurance, and pension scheme.

vi. Scope for Future Investment

Insurers can usually make more profit from investment than from their regular insurance
businesses. Private insurance companies are realizing this fact and playing role in the financial
market. Insurance companies are making large investment in government bonds, ICB projects, and
in other private sector business. Scope of investment expansion persists in the areas leasing,
housing, health and money market etc.21
                                                            
19
 https://www.thedailystar.net/business/news/bangladesh-most-underinsured-nation-1674145 
20
  https://www.assignmentpoint.com/business/overall-insurance-companys-problems-and-prospects-in-
bangladesh.html 
21
 https://www.assignmentpoint.com/business/overall-insurance-companys-problems-and-prospects-in-
bangladesh.html 

Page 11 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

 vii. Scope for Service Diversification

Insurance is not just a tool for risk coverage. It is also an attractive instrument for making savings.
The mixture of risk coverage with savings gives the opportunity for innovative product designing
which means service diversification of the companies. In a dynamic insurance market, one can
expect to see new products being promoted at regular intervals22. So far, very little efforts have
been taken to innovative services and introduced need oriented insurance services in response to
existing threats.

The economy of Bangladesh is predominantly an agrarian one where most people are engaged in
farming and fishing professions. The uncertainty of agriculture due to crop failure caused by
climate variation, drought, cyclone, flood and pests affect farmers’ income as well as government
revenues. Furthermore, in last few years’ commercialization has occurred in some sections of the
agricultural sector. Increase in investment in the agricultural sector is creates new opportunity for
the insurers. Various agricultural insurance services are becoming common now a day. Demand
for insurance protection against crop loans, livestock loans, fisheries loans and equipment loans
are also increasing day by day.

5. Concluding Remarks
Insurance industry of Bangladesh has very high potentials. It is very much important from both
business and individual perspectives. For the development of balanced economic growth,
insurance can play an important role in a country. Individual can get protection of their lives and
properties by insurance. Most of the insurance companies provide more or less same services in
Bangladesh. For this reason, competition has been increasing between the insurance companies in
the country which is not associated to improve the quality of services in this sector. On the other
hand, some new insurance companies are going to start businesses in this competitive market
which are very much challenging. Hence, to make insurance services to the potential customers
visible and to provide smooth and quality services the use of information technology is essential
for the insurance companies. Now, a company cannot establish properly without developing and
using information technology in their operations. People search their desired information through
Internet and Websites. Therefore, insurance companies need to develop their Smart Websites to
increase customers and investors from home and abroad. In Bangladesh, insurance problems are
mainly associated to the company’s operations, branding and marketing functions. These
companies have lost their image to 170 million people of the country due to limitless information
gap and deregulation problems. The progress of insurance business also depends on the progress
of the economy of the country. As the insurance businesses are facing a number of problems, if
the economic condition of the country is developed and the problems of the insurance industry are
removed, insurance business can get back its past glory in future.

                                                            
22
 https://www.dhakatribune.com/business/2018/06/19/future-for-insurance-lies-in-diversification-digitalization 

Page 12 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348

6. References

1. Ahsan, S. M., Khalily, M. B., Hamid, S. A., Barua, S., & Barua, S. (2013). The
Microinsurance Market in Bangladesh: An Analytical Overview. The Bangladesh
Development Studies, 1-54.
2. Bhattacharya, D., & Khan, S. S. (2018). Bangladesh Becoming a Middle-Income Country,
Ceasing to be a Least Developed Country: Clarifying Confusion.
3. https://www.dhakatribune.com/opinion/op-ed/2017/11/29/long-way-go
4. Khan, M. S. U., & Uddin, M. N. (2013). Insurance industry in Bangladesh: opportunities
and challenges. Thoughts on Economics, 23(4), 55-78.
5. Mamun, Z. M. (2015). Ethical Standards in Life Insurance Companies in Bangladesh: The
Policy Holders’ View.
6. Perspectives, B. C. G. (2015). Bangladesh: The surging consumer market nobody saw
coming. Retrieved March, 10, 2016.
7. Reza, S. M., & Iqbal, M. M. (2007). Life insurance marketing in Bangladesh. Daffodil
International University J Business Eco, 2(2), 87-103.
8. SM Ibrahim Hossain ACII (UK), (2018). Challenges of Insurance Marketing in
Bangladesh, Insurance Journal, Vol 63, January, pp. 40-50.
9. Shi, B., Baranoff, E. G., & Sager, T. W. (2016). Product Diversification in Health Insurance
with Comprehensive Coverage Benefits US Health Insurers. Journal of International &
Interdisciplinary Business Research, 3(1), 14-28.
10. Vaughan, E. J., & Vaughan, T. (2007). Fundamentals of risk and insurance. John Wiley &
Sons.

Page 13 of 13 
 

Electronic copy available at: https://ssrn.com/abstract=3439348