Insurance penetration across Bangladesh slows although premiums bloat as, experts say, insurers lack expected drive to cash in on expanding economic activity in the country.
A key parameter for assessing development of the insurance industry is "insurance penetration". And the penetration has been on a downturn especially since 2018 when it was 0.55 per cent and came down to 0.40 per cent in 2022.
On the descent, the penetration measure was 0.53 per cent 2019, it read 0.42 per cent in 2020 and further down at 0.41 per cent in 2021.
On the other side of the scale, the growth in premiums of both life and non-life insurances has kept expanding, excepting in 2020 when the Coronavirus pandemic hit the country as also other parts of the world.
The premium growth was 10.71 per cent in 2018, in 2019 it was 8.13 per cent, in 2020 it marked a negative growth of 1.25 per cent, in 2021 it stood around at 9.56, and in 2022 at 10.6 per cent.
The premium earnings from both life and non-life insurance policies stood at Tk 160.2 billion in 2022, it was Tk 123.8 million in 2018, Tk 133.9 billion in 2019, Tk 132.2 billion in 2020 and Tk 144.8 billion in 2021.
The truncated industry pictures came in a presentation given before the high officials of the financial institutions division of the Ministry of Finance on February 01--in a move for turning the corner in this potential financial sector of the economy.
Penetration rate indicates the level of development of the insurance sector in a country. Penetration percentage is measured as the ratio of premium underwritten in a particular year to the GDP.
The presentation shows the reasons behind the uneven growth, and states that "the GDP or gross domestic product is far outpacing the insurance industry".
Insurance penetration considers premiums from life and non-life insurance policies only as a percentage of GDP.
The factsheet shows the GDP was recorded at Tk 29.5 trillion in the fiscal year 2018 and it rose significantly to Tk 44.4 trillion in fiscal year 2022-23. And this GDP size is much greater than the insurance receipts.
Contacted, senior officials at the insurance regulator, IDRA, said they were trying to stabilize the industry which will lead to attracting people to the industry.
"We're trying to enhance image of the industry through regular settlements of claims," says one official, about the move for a rebound from some drawbacks.
He also says the regulator has identified the weak insurers and it may take stern measures against them shortly.
The settlement of life-insurance claims also dropped to 67 per net in 2022 while it was 89 per cent in 2022.
Bangladesh has now 34 life insurers and 45 non-life companies. A new life company named Shanta Life got IDRA approval but yet to take memberships from the Bangladesh Insurance Association, an apex body of privately owned life-and non-life insurers.
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