Our Insurance Industry
By Bipul K Debnath
Purnima Rani Das is now solvent and leads a happy life with her four children. But the 48-year-old woman went through a lot of sufferings when her husband, Jiban Chandra Das, a hairdresser, died suddenly of a fever at the age of 58. That happened in 2005. After some months of her husbands death, the widow came to know that he had a 10-year term life insurance plan with National Life Insurance Company Limited (NLICL) for which he had paid premium for nine years. She claimed the insurance money, worth Tk 170,000, at the local office of NLICL at Debidwar upazila of Cumilla district.
After getting the money, I bought some cattle. Within a few months, I made huge profit. Later on, I expanded my business. Now, my children are helping me, along with their studies. If I didnt get financial support at that time, it would have been difficult for me to get back on my feet. I am now a policy-holder myself, and I would request everyone to get benefit from life insurance, Rani Das told this correspondent over the phone recently.
On the other hand, sometimes policy-holders face trouble in getting their insurance money in due time.
After completing the 10-year period of my life insurance policy with NLICL, I contacted their local office several times at Kaliganj (upazila) in Jhenaidah. But six months have passed, and I have not received my due money yet. I dont know when I will get it, said Ayub Ali, 53, a van driver, in a gloomy voice.
When asked about Alis claim, Amir Hossain, public relation officer of NLICL at its head office in Dhaka, said: Our clients are increasing everyday and we are providing money from insurance claims each month around the country. If the client (Ali) comes to us with his policy number, we are ready to serve him.
Insurance is an initiative against provable risks that can contribute to the sustainable economic progress of the country. This week, The Weekend Independent talked to clients, officials and consultants of insurance companies regarding the present situation of the industry, its growth and future plans to turn it into a trusted financial service provider.
Munir Hossain, 29, a postgraduate student, is a policy holder of MetLife Bangladesh (formerly Alico), one of the largest global insurance companies. When I came to know about the advantage of insurance, I got a 10-year term policy. I have already paid premium for six years. I hope it will be a great support when I get a good amount when my policy matures, said Hossain, who is doing an MBA.
According to Bangladesh Insurance Association (BIA), some 76 insurance companies _ 31 for life insurance and 45 for non-life (general) insurance _ are operating in the country. Jiban Bima Corporation (JBC) and Sadharan Bima Corporation (SBC) are state-owned insurance companies, while Green Delta Life Insurance, Fareast Islami Life Insurance, Meghna Life Insurance, Padma Islami Life Insurance, Popular Life Insurance and Pragati Life Insurance are some of the top private insurance companies.
The insurance sector is important in reducing the risks of the financial sector and its scope is increasing day by day, said Nishith Kumar Sarker, secretary general of BIA.
M Ali Noor, managing director of Jiban Bima Corporation, added: There is great possibility in this sector. Thus, the government has already started various initiatives to promote the sector and increase its institutional efficiency. We have regional offices to extend our services to the people.
But experts believe more transparency and accountability is urgently needed to expand the insurance industry. Image crisis is a major problem in this sector and the authorities concerned must work on that, they said. Besides, confidence and trust among the people should be ensured, they opined.
Insurance Development and Regulatory Authority (IDRA), established in 2011, is working as a regulatory authority in this sector.
Most of our member companies are working together with IDRA to improve the image of this industry. So, IDRA has to do audits every two years, said AKM Monirul Hoque, chairman of Nitol Insurance Company Ltd and vice president of BIA.
There are different types of policies for pension schemes, and other types of insurance, like health, life, fire and accident. Clients can get any of them, added Hoque.
There are also insurance plans for property, crops, vehicles and travel. Anyone aged 18 and over who is physically fit can buy a life insurance policy. The amount of premium varies according to age and health condition, etc, and insurance companies have their own medical officers to provide fitness certificates.
Insurance means taking on risks. Our work is to remind the insurance companies to refrain from any types of ill practices. If a client faces any problem in getting money from the insurance company, then they can apply to us. We have resolved about 1,000 insurance claims since 2017, said Gokul Chand Das, a member of IDRA.
Regarding the regulatory authoritys monitoring work, Das explained: The insurance companies are told to pay the claimed money within 90 working days. But, in reality, most of the companies fail to follow the order. We take complaints from the clients and give instruction to the insurance companies to fix the issue. If they do not follow the instruction, we fine them.
About the future of the insurance industry, Das said: Motor vehicle insurance is mandatory in our country. It covers damages to the vehicle and monetary compensation for wounded passengers (in case of an accident). There is also fire insurance, crops insurance and other types of insurance. Life insurance has 10 to 15 years validity. However, non-life insurance is valid for one year.
Moreover, air insurance is compulsory, according to international aviation laws. Insurance is also a must for opening LC (letter of credit) for exporting and importing goods, the IDRA member added.
For improving the capacity and activities of IDRA, Gokul Chand Das said: We want to launch automation technology in this sector and remove suspicion among people when it comes to life and non-life insurances. And we are working to shut down the agent commission business and unhealthy competition in this sector.
There are shortages of actuary professionals in Bangladesh. We need more graduates in actuarial science for this sector. A recent survey says 100 to 150 actuaries are required to smoothly run the activities of this industry. But we have only 10 to 15 actuaries now, Das added. An actuary is a professional who compiles and analyzes statistics and probabilities and uses the data to calculate insurance risks and premiums.
The Department of Banking and Insurance of Dhaka University (DU) is now offering higher degree in insurance studies. About the professional course and willingness among students to study the subject, M Muzahidul Islam, a professor of the department, said: We offer Master of Actuarial Science (MAS) to create actuaries for the insurance industry. The 6th batch is going on. We got huge response in the beginning. Most of the students are jobholders. But regular students are not applying for the course. Thus, the number of students is reducing gradually.
Narayan Chandra Rudra, CEO of Meghna Life Insurance Company, who used to work as an actuarial associate at a private company, added: The course is expensive and time consuming. Only developed countries like the UK, USA, Canada and Australia, offer this degree. But from what I can see, we are going to get some new full-fledged actuaries soon.
On the other hand, Muzahidul Islam complained about the activities of IDRA, saying: There are some retired government officials who are working for IDRA. The insurance companies see the insurance business as a money-making scheme only. They even fail to implement the 2010 insurance law properly.
Insurance principles have not taken hold yet. Besides, the government has to revise the Insurance Act 2010. And everybody should understand that the insurance business is a dignified and dynamic profession, the DU professor said.
Medical costs are increasing day by day. So, the demand for health insurance is increasing now. On the other hand, the market for reinsurance is going outside the country and we have to control that. The government should restart crops insurance and subsidise the sector. Insurance can greatly benefit low-income groups and can be a trusted support for the elderly citizens of the country, Islam elaborated.
There is no training institute where (insurance) officers can take training to develop their career. We also do not see any useful journals on insurance, the professor continued. There is no facility and scope for research. Some researchers recently prepared a paper with the help of MetLife. But other insurance companies have not come forward to help with research. They are not very cooperative. We have also recommended rewarding the best performers in this industry. But the BIA does not pay any heed to our proposal.
In reply, Sarker, the BIA secretary general, said: Some companies have already started offering extra facilities to the best officers. They also have their own training programmes to develop the skill of their staff.
Most people in Bangladesh do not have any sort of insurance coverage, and many are reluctant to get involved in this sector. Most people do not have any idea about insurance. A recent survey shows there are only 4 out of 1,000 people with insurance policies in our country, said Mahmudun Nabi, 73, a senior consultant working in the insurance sector. They rather go for fixed deposit receipts (FDRs) or deposit premium schemes (DPSs). Many even think of insurance as unnecessary and bothersome. Besides, most branches of insurance companies are operating in urban areas. So, people living in rural areas are deprived of this service.
Moreover, clients are sometimes cheated by dishonest insurance officials, who are polluting the goodwill of the industry, said Nabi, who has worked as a top management official with different private insurance companies for 30 years.
Yes, there are some dishonest people in this sector who are negating the benefits of getting insurance. It happens from the branch manager to the agent in the field. When they get a huge amount of money from a client, they hide with the money. Thus, the problem arises, alleged Nabi.
Furthermore, the consultant suggested making the procedure of claiming insurance money easier for clients: From my experience in the non-life insurance sector, I have seen that clients face a lot of problems when they do not get the insurance money on time. I think officials of the insurance companies should be more friendly and liberal with their clients when making payouts, so people will be more willing to become policyholders. The money due from life insurance should be paid to the nominee within five days of the clients death.
Nabi, who is also chief editor of insurancenewsbd.com, an online news portal, also gave some suggestions to develop the sector: There is a need for big changes. For that, monitoring by IDRA should be expanded and they have to adopt plans to develop skilled manpower. Besides, they have to develop the capacity of controlling and modernising the industry. Moreover, insurance studies should be included in textbooks at every educational level. Insurance companies should also introduce new product ideas to their clients. n
Photos: Internet
