Life Insurance – A growing industry in Bangladesh
Living in a high growth era, people in Bangladesh are on the path of experiencing prosperity through increase in per capita income, entrepreneurship development, consumption growth and rapid urbanisation. The emerging Asian Tiger is reaching out at the global stage and competing with some of the finest businesses with its appetite for growth and overall development.
As the economy grows and standard of living improves, insurance is considered to be a vital risk-mitigating weapon. Life insurance, in particular, supports sustainable development by mobilising long-term capital that leads to wide-scale infrastructure building and creation of more jobs. The cycle of protection, savings, investment and more protection is at the heart of life insurance.
Currently, overall insurance penetration in the country is approximately 0.57 per cent compared to Thailand’s average of 5.27 per cent, Malaysia’s 4.77 per cent, China’s 4.22 per cent, India’s 3.7 per cent, Indonesia’s 1.95 per cent and Sri Lanka’s 1.15 per cent. This indicates that emerging Asia Pacific economies are leveraging the benefits of insurance for growth and development.
While there is a reason to be worried about lower level of insurance penetration in Bangladesh, there is the bigger picture – an opportunity which is unexplored and which represents huge potential in view of the economic growth in excess of 8.0 per cent. With rapid poverty reduction and a growing size of the middle class, the country is witnessing an upsurge in domestic consumption coupled with bigger dreams and aspirations of the youth.
A society which is witnessing a shift from ‘survival mode’ to ‘thriving actions’ needs support of a structured financial management tool in the form of insurance. The Bangladesh people today are more educated, and determined to take risks, participating in competition at global platforms. Young entrepreneurs are creating employment opportunities and continuously focused on upgrading their lifestyle. The country’s economic progress has empowered the people with higher purchasing power and hence, insurance as a tool becomes necessary to safeguard them from financial risks.
There are 78 insurance companies – 32 life and 46 non-life – operating in the country at present. In 2018, Bangladesh’s insurance premium earnings rose by 11.06 per cent to Tk 124.165 billion, according to data available with the Insurance Development and Regulatory Authority (IDRA). The gross premium from life insurances stood at Tk 90.20 billion in the year, up by 10.10 per cent while premium of non-life insurance stood at Tk 33.97 billion showing 13.92 per cent rise. Life insurers disbursed a total claim payment of Tk 65.71 billion with the claim settlement ratio of 88.51 per cent.