2 foreign insurance giants to lay stake on BD market

Two foreign giant life-insurance companies are likely to enter Bangladesh's oversaturated market.
The insurance multinationals are Taiyo of Japan, which have more than 5.0 million policyholders, and Life Insurance Corporation of India (LIC), a company having an annual turnover of $4.7 billion (2012).
The Ministry of Finance (MoF) has lately requested the Insurance Development Regulatory Authority (IDRA) to facilitate the entry of the two foreign insurance firms by considering their international repute and strengths, an official at the Bank and Financial Institutions Division told the FE Wednesday.
The MoF requested the IDRA to prepare modalities of granting them operating licences.
Insurance-insiders fear local firms may face an 'uneven' competition following the entry of the two insurance giants as they have under their command innovative products, goodwill and substantial amounts of funds.
Incepted in 1893, Taiyo has partnered with local power-giant Summit Group and the LIC has linked up with another non-life insurance company, Pioneer Insurance.
The Japanese insurer with over $90 billion worth of life funds and assets offers protection-oriented products focused on medical and nursing care.
Headquartered in Mumbai, the Indian corporation provides life- insurance products in India and beyond. The company offers insurance, pension, unit, special, and micro-insurance plans, group schemes, withdrawn plans, and health plans.
Both the foreign companies with international repute had applied for registration in Bangladesh in 2013--at a time when the regulator sought application for registration of new insurance companies and later allowed 14 new life-insurance companies in business.
But the insurance regulator had rejected the LIC application on grounds of holding 90 per cent stakes in the proposed partnership.
According to the government's latest circular, foreign companies could hold at best 60 per cent shares, leaving the remaining 40 per cent for local partners.
The LIC, formed in 1956, submitted a letter dated January 28, 2014 by redesigning the share holdings.
But, insurance experts opine that LIC, owned by the Government of India, cannot give 40 per cent to Pioneer Insurance alone as the existing rules do not permit it.
On the other hand, the IDRA gave its consent on the Taiyo-Summit Life Insurance Company (proposed) but later the proposed company changed holding of shares, frustrating the regulator.

jasimharoon@yahoo.com