$65m WB loan deal soon to develop insurance sector

The government would soon sign a US$ 65 million (about Tk 5.19 billion) loan agreement with the World Bank (WB) to enhance the capacity of the insurance regulator and the state-owned insurance corporations of the country, officials said.
They said the WB has already sent the drafts of the financing agreement, project agreement, project appraisal agreement (PAD) and disbursement letter of the loan to the authorities concerned.
The Economic Relations Division (ERD), on the other hand, sought opinions on the drafts from the ministries and divisions concerned, aimed at finalising the drafts.
The project aims at increasing insurance coverage, consumer protection and enhancing the efficiency of the insurance market, a WB letter reads.
Earlier, the WB had discussions on the funding with the Bank and Financial Institutions Division (BFID) of the finance ministry and the Insurance Development and Regulatory Authority (IDRA) of Bangladesh. Implementation of the project is expected to begin in March this year and be completed in February 2023, sources said.
The objective of the project is to strengthen the institutional capacity of the sector's regulator and the insurance corporations for enhancing the insurance coverage in the country, a high official of the finance division told the FE.
He said the finance minister has already approved the draft DPP (Development Project Proposal) of the project titled "Bangladesh Insurance Sector Development Project".
Earlier, the project title was 'Bangladesh Insurance and Private Pension Market Development' and later revised to remove a component of private pension market.
The insurance sector is under supervision of the BFID while the pension matters come under the finance division. So, the private pension component has been separated through discussion between the two divisions of the finance ministry.
He said it has been done mainly to keep the project focused only on the insurance sector while a separate initiative would be taken later for the development of the private pension market, a senior official of the BFID said.
The proposed components of the project are: improving the capacity of the IDRA and Bangladesh Insurance Academy (BIA), and modernisation, strengthening and increasing the efficiency of the state-owned insurance corporations. The revised total budget for the project will be $ 80 million (about Tk 6.38 billion). The project costs will be financed from International Development Association (IDA) loan of $ 65 million and contribution of $ 15 million by the government.
According to the DPP, some $ 45 million will be spent on strengthening and improving the capacity of the state-owned insurance companies while $ 30 million on modernisation of BIA and IDRA, $ 5.0 million on implementation and monitoring purposes.
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