Diversified insurance products have the potential to integrate the insurance industry further into the fabric of Bangladesh, akin to the banking sector, by extending its reach to a wider demographic.
Shafique Shamim, the managing director of Sena Kalyan Insurance Company Limited and also a retired Brigadier General of the Bangladesh Army, emphasised the necessity for the entire industry to anticipate and address the evolving needs of clients in the forthcoming years.
He underscored the significance of bancassurance in the current Bangladeshi context, foreseeing mutual benefits for both insurance companies and banks.
Shafique Shamim, sharing his insights ahead of the National Insurance Day on March 1, projected a substantial surge in client demands within the next five years, urging proactive industry-wide strategic planning to meet these burgeoning requirements.
Highlighting the importance of compliance with corporate governance guidelines set forth by the Insurance Development and Regulatory Authority, he advocated for early adoption and implementation among insurance entities.
He envisaged a future where insurance, through proactive measures, becomes as indispensable to Bangladesh鈥檚 development and organizational landscape as its banking sector.
Additionally, he stressed the imperative for insurance companies to introduce inclusive, universally accessible products, citing examples such as crop, cattle, transport, travel, and personal accident-related policies, which could benefit a larger segment of the population.
He elucidated the potential of such policies to mitigate risks and foster trust among policyholders.
For instance, he disclosed that a worker at Sena Kalyan contributes Tk 330 as a premium for a Tk 1 lakh personal accident insurance policy, which provides coverage in case of work-disrupting accidents鈥攁n offering still relatively unknown to many.
Shafique Shamim also remarked on the current landscape of general insurance in Bangladesh, characterised predominantly by fire, motor, and marine policies, questioning the accessibility of these products to the broader populace given their specific coverage scopes.
聽鈥業n the non-life insurance sector, despite our best efforts, we are only able to reach three to four percent of the country鈥檚 population,鈥� he stated.
聽鈥業n a rapidly developing economy, relying on such a small percentage seems counterintuitive. Instead, we should design products that cater to a larger portion of the population with minimal premiums.鈥�
As an example, he proposed introducing insurance for passengers of buses and trains. 鈥業magine if a bus ticket costs Tk 100, and by adding Tk 10 for insurance, passengers would receive Tk 1 lakh in case of an accident. If 10 lakh people buy bus tickets daily, the premium would be 10 lakh multiplied by Tk 10.鈥�
Introducing products like these would enable insurance companies to reach a broader audience and increase premium revenue significantly. Without such innovations, he noted, the penetration of non-life insurance products will remain limited.
Explaining the reluctance to introduce such products in Bangladesh, he mentioned the apprehension among clients and the scarcity of an educated workforce in the sector. 鈥榃e lack skilled individuals to initiate new ventures in Bangladesh,鈥� he said.
He advocated for government assistance, suggesting that if the government mandates universal products, adoption would increase. 鈥楾o summarise, we require a more educated workforce to develop products, a shift in people鈥檚 mindset towards new offerings, and initial support from regulatory authorities or the government,鈥� he concluded.
He highlighted that following the 2023 IDRA鈥檚 corporate governance guidelines, all new insurance companies fall under regulatory oversight.
聽鈥榃ith strong regulatory efforts, significant changes can be expected in the insurance industry over the next five years,鈥� he predicted.
He urged regulatory authorities to mandate policies like the Bangabandhu Education Insurance to safeguard the population, thereby playing a pivotal role in introducing universal products.
Brig Gen Shafique Shamim emphasised the importance of Bancassurance, describing it as a contemporary necessity for Bangladesh.
He noted the inherent trust people have in bank officers over insurance agents, highlighting Bancassurance as a system where banks act as agents for insurance companies, selling insurance products alongside their own.
He highlighted the potential benefits, stating that Bancassurance could significantly reduce unnecessary commission expenditures overnight, thereby curbing wasteful spending and money laundering.
He emphasised its potential to address two key issues plaguing the insurance sector: image and excessive commission charges.
Addressing concerns about Bancassurance, he clarified that not all insurance products would be offered through banks, assuring that livelihoods in the insurance marketing sector would not be adversely affected.
He suggested that Bancassurance would be particularly effective for life insurance in Bangladesh, potentially reducing scams and improving service quality.
Highlighting the mutual benefits, he explained that banks would earn commissions from insurance product sales, while insurance companies already keep their premiums in banks.
He underscored the increasing awareness among the public about the insurance sector and advocated for its promotion akin to the mandatory status of banking transactions.
He criticised the negative publicity surrounding the insurance industry, attributing much of it to around 60 per cent of advertising being negative propaganda.
