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Time to focus on insurance industry in Bangladesh

The government after independence, following a rancorous war, took over the control and management of all the pakistani Insurance Companies and finally, the insurance industry of Bangladesh was nationalised in August 1972.

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.

However, Bangladesh’s insurance market is not very large in comparison with the degree of risk. For a better functioning of the insurance industry and to reach good growth of the insurance industry in Bangladesh. Insurance business in Bangladesh nowadays is quite shaky. The agents lodge a prominent position in the insurance market of Bangladesh whilst the system of professional brokers has not yet advanced in the country. A total of 60 insurance companies are functioning in Bangladesh till date. Of  these companies, 57 are private, two state-owned and one is foreign  insurance directorate, under the ministry of commerce,is the regulatory-body of the country’s insurance sector. At present there are 44 general insurance companies running in bangladesh.Many other private companies are about to commerce.

Currently, sixty three insurance organizations including postal life insurance are running their operation in Bangladesh but only 19 insurers are proposing life insurance policies. In this subcontinent, Postal Life Insurance (PLI) has a long tradition and is the oldest institution in the country to deliver life insurance service to individuals. It was recognized in 1884 with the purpose to provide life insurance at a low cost to the employees of the post office.

When established mutual fund, it was functioning on non profit basis and in 1947, its life insurance service was unwrapped up to the government employees. In 1958 it was unbolted for general people. It can deal life insurance policies at the lowest premium. The competitive advantage of postal life insurance is its large institutional set up in both urban and rural areas.Like commercial life insurance companies. P.L.I propositions whole life policy, education and marriage, endowment policy, three stage policy etc.

Sadharon Bima Corporation (SBC) is the only public sector insurer.It also acts as the sole reinsure of all general insurance companies of the country. SBC is dealing with the traditional types of general insurance companies of the country. SBC is dealing with the traditional types of general insurance as marine, fire, motor etc. More than 50% of its premium comes from the marine insurance. Besides the traditional types of insurance SBC introduced crop insurance and personal accident policy in 1977. people’s personal accident insurance is open to every person of 16 to 60 years of covers accident while on travel by bus,train,steamer,airplane of any other modes of conveyance.

The problems of insurance industry in Bangladesh are many like lack of public faith, centralization policy, poor economic condition, political instability etc. Government along with insurers need to check all those problems for the further development of insurance indutsry. The success of the insurance industry can be dogged by on insurer’s stability to run into its contractual obligations and government is obligied to reserve this security.

It is noted that the recent worldwide fashion has been toward deregulation of the insurance industry. But to many observers, deregulation really means re-regulations i.e. shifting from “exante”approaches to “ex-post” and “self –regulatory” approaches. In a view of present state of affairs in the insurance sector, effective re-regulation is the prime importance.

In fact, the present day regulations and supervisions have to be made according to international standards as well as fair and transparent. The present market ought to be served by financially healthy insurance entities comprising direct insurers. reinsurer and insurance intermediaries all working together.

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