Local insurers fear that the entry of two global giant life-insurance companies, Taiyo of Japan and the Life Insurance Corporation of India (LIC), may pose a 'threat' to their survival in an uneven competition.
When contacted, president of Bangladesh Insurance Association (BIA) Sheikh Kabir Hossain said entry of the two foreign companies would pose a threat to the local life-insurance companies.
Bangladesh has now 31 life-insurance companies, including the state-owned Jiban Bima Corporation, with an aggregate annual turnover of over Tk 62.0 billion, less than 1.0 per cent of the country's gross domestic product.
"Our local companies are not so big in terms of funds as is the case with the two foreign companies that do aggressive marketing in their respective countries," said Mr Hossain, also chairman of Sonar Bangla, a non-life insurance company.
Mr Hossain, however, said they should comply with the law of the land.
Kazi Md. Mortuza Ali, managing director of Prime Islami Life Insurance, a shariah-based life firm, said the two foreign companies are entering the country's market at a time when the local ones are struggling to survive amid fast squeezes in their earnings.
He said many foreign and joint-venture companies in India are facing problems following aggressive marketing by LIC.
Mr Mortuza, however, said the policyholders might derive many benefits after their access to Bangladesh's over $800 million market.
An insider at the US-based MetLife Alico, however, said they are not panicked at the news of entry of two internationally reputed insurers in Bangladesh.
"I do hope that there will be very good competition to lure the customers," said the executive of Alico which has been operating in Bangladesh since 1952.
Taiyo Proposal Revised
In the proposed joint venture, Taiyo-Summit Life Insurance Company, Taiyo initially wanted to hold 57 per cent shares and give the rest to Summit and two other individuals.
Taiyo later submitted a revised application to the IDRA to curtail its shares to 19.9 per cent from 57 per cent of proposed Taiyo-Summit Life Insurance Company.
The IDRA argued that under the existing practices, no insurance company could change share holdings so hurriedly.
In a number of meetings with the representatives of the Taiyo of Japan, the IDRA asked it to maintain the previous share holdings but the Japanese company didn't comply.
People familiar with the JV told the FE that Taiyo wanted to go banking on the existing rules of Japan.
They said the company will not face tough complexity in getting approval in Japan if it invests outside Japan less than 20 per cent stake.
Contacted, the IDRA high-ups declined to comment on the matter.
But they hinted that they are scrutinising their files.
jasimharoon@yahoo.com
