Paul Thomen

Wednesday, 22 January 2014

Insurance Market in Bangladesh 2017

A high rate of accidents on roads in Cambodia encouraged the population to invest in motor insurance and third-party liability insurance.

The Bangladeshi government’s commitment to promoting the insurance industry as an important component of the financial system means it has a promising future. Reform measures have been implemented to mobilize savings from both rural and urban areas, and use them in social and economic programs or projects. As a step towards this, the government implemented two acts – the Insurance Act, and the Insurance Development and Regulatory Act – in 2010. It also organized the first South Asian Association for Regional Corporation (SAARC) Insurance Regulators’ Conference in Dhaka in April 2013. The conference aimed to provide scope for insurance professionals in the country and to improve their understanding of the insurance industry and insurance regulatory frameworks. Initiatives such as these are expected to support the growth of the country’s insurance industry over the next five years.

Low awareness restricted insurance industry growth. Only 5% of the country’s population possesses life cover and over 80% of non-life insurance business is derived from commercial lines of business. However, the Bangladeshi regulatory authority is addressing this problem through participation in national and educational exhibitions, and road shows. The regulatory body is actively conducting press interviews, publishing newspaper articles, brochures and leaflets on ‘how to obtain insurance cover’ and ‘how to fill in a proposal form’, and providing informative press notices. Nevertheless, changing attitudes and popular perceptions remain a challenge.

Given the small volume of business, the Bangladeshi insurance industry is highly fragmented. Sadharan Bima Corporation (SBC), a state-owned insurer, dominates the non-life segment, while life insurance is dominated by Jiban Bima Corporation, another state-owned firm.
The non-life segment is significantly smaller than the life segment. However, non-life insurance has more than twice the number of companies operating in it. This illustrates the highly competitive nature of the segment, and the level of fragmentation. In the non-life segment, market participants are focused on commercial lines of business.

Bangladesh is highly vulnerable to climate change. The country is exposed to floods, cyclones and tornados, which seriously affect human life, shelter, agriculture, and food and water security. The increasing amount of risk being retained by insurers.

With 50% of the Bangladeshi population living below the national poverty line, growth in the life insurance segment is limited. A high illiteracy of 43%, and religious beliefs also restricted growth. In order to tackle this problem, general insurance companies are aiming at commercial lines of business rather than personal lines.

Reasons to buy:
  • Increase your knowledge of the factors affecting the Bangladeshi insurance industry.
  • Minimize the business risks you may face within this market.
  • Obtain a better understanding of the regulations introduced and how they affect the industry.
  • Gain a clear understanding of market opportunities and entry strategies to gain or grow your market share in the insurance industry in Bangladesh.
  • Receive the information needed to gain a greater understanding of the technological trends in the insurance industry.

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