Are we prepared for life's changing cycles and for those situations unforeseen? Here we are just talking about importance of insurance in Bangladesh. Below one percent of country population is insured. Insurance penetration has been declining for the past several years, even though the country's major economic indicators have been growing steadily for over a decade now.

So to say that vision is absence just for this sector in the country. And mass people of our country are not conscious about how to save, invest and make wealth management and retirement funding management by the insurance.

In Bangladesh, overall insurance penetration both life and non-life stood at 0.72 percent in 2015, down from 1.13 percent in 2010, according to Swiss Re (a global reinsurance company). The penetration rate last year was that 0.53 percent came from life and 0.19 percent from non-life insurance companies.

Data shows the penetration rate continued to slide down in Bangladesh since 2010. The rate was 1.02 percent in 2011, 0.95 percent in 2012, 0.85 percent in 2013 and 0.70 percent in 2014.The insurance penetration rate indicates the level of development of a country's insurance sector. But globally, penetration rate is 3.8, according to the organization for economic cooperation and development (OECD).

But the penetration rate is much higher in other South Asian countries and Bangladesh's peer nations across the world. Insurance penetration was 3.4 percent in India last year and 1.06 percent in Sri Lanka. The penetration was much higher in Vietnam, Kenya, Angola and Pakistan, according to the Swiss Re report.

Economically insurance sector contribution is still below. On the other hand, insurance Development and Regulatory Authority (IDRA) claimed the total insurance premium to be 0.90 percent of Bangladesh's GDP. A total of 77 insurance companies is operating in Bangladesh. Of which, 46 are non-life and 31 life insurers, including state-owned.

The country has a lot of opportunities to penetrate the insured. Young generation of our country almost 47.6 million (30%) of total populations (158.5 million), according to the united nation fund for population (UNFPA) report, that already we have. Also our GDP growth is 7.2% and per capita income is $1602, which continues to grow. Additionally, we will reach middle income country by 2021.

But the problem is a hugely untapped market in our country. A lack of awareness among people about insurance is a major reason behind the poor premium growth.Companies tend to do business with the traditional system and products and they are not investing in research and development to tap new business from hugely unexplored sectors.

Moreover, some of the insurance companies' tendency not to show their real premium earnings in their books of accounts is the major reason behind the falling penetration rate.

The industry insiders blamed a number of reasons for the poor insurance business in the country, such as saturated market, falling private investment, declining premium income from multinational companies, no effort to bring untapped sectors into insurance and poor claim settlement records by insurers.

Furthermore, some international insurance company is operating the traditional product in our country, but internationally they are running 200 products. Companies are afraid to operate the new products because of absence of research and development by the company.

Another problem is unemployment rate is huge in our country. Five out of ten graduate students are unemployed in the country according to the Economic Intelligence Unit (EIU) report.

Nowadays, the country’s economists are thinking that no regulatory approach to developing the sector is another cause driving down the business. For example, households and lakhs of flats in Dhaka and other big cities are still out of insurance coverage. If 80 percent of motor insurance, which are done by third parties, come under comprehensive insurance, the premium will shoot up significantly.

Now what to be done? Obviously it is necessary set up missions like unified action for delivering innovative solutions where every individual's needs are best met, becoming professional in the way we conduct ourselves and in the counsel we give, and ethically ensuring that our policyholders' interests are managed with utmost integrity. Striving to provide favourable outcomes to both our policyholders and shareholders is also important. It is also necessary to build an environment of trust and transparency.

At the same time insurance authority (IDRA) and BIA (Bangladesh Insurance Association) should come forward vigorously to develop new products to bring more people into the sector. Moreover, developing public confidence and establishing a sound insurance structure and promoting of greater efficiency within the industry for long-term protection of life is also vitally important.

The writer is Deputy Secretary, Bangladesh Knitwear Manufacturers and Exporters Association

(BKMEA). Email: [email protected]