IDRA move for central database, UMP

The Insurance Development and Regulatory Authority (IDRA) has taken a fresh initiative to remove customer dissatisfaction in insurance sector through launching Unified Messaging Platform (UMP).
Approximately more than 10 million policy holders of both life and non-life insurance companies will be directly benefitted by implementation of UMP.
IDRA says, as a part of modernisation and digitisation of insurance sector, often seen as a simile for malpractices and unethical businesses, the initiative has been taken to send notification through SMS by central arrangement where each insurance company gets separate UMP portal.
Initially the policy information of insurance companies will be digitised on a specific format. Along with the central messaging system, notification regarding premiums will be delivered to all subscribers.
IDRA member Dr. M Mosharraf Hossain informs that through SMS every insurance customer will be informed about the premium collection. UMP will ensure transparency in the insurance sector boosting customer rights and confidence.
In the initial stage, transparency and confidence will be established firmly by implementing the UMP, which will directly benefit the insurance companies.
He also says the insurers do not need to invest separately rather with the implementation of that UMP, policy rate of the life insurers will be significantly reduced, which will increase the confidence of the general public in the insurance industry.
IDRA circulated an instruction letter to all insurance companies recently, an IDRA source said.
According to the information, insurance companies collect policies through the field level agents.
But customers are outrageously victimized by various harassment, including non-payment of premiums, misappropriating customer's money, dropping insurance policy, non-payment of claims and causing so many complications due to insufficient data infrastructure.
''The latest IDRA move is aimed at cracking the whip on the errant insurance companies which are involved with lot of unethical business practices over the years," an industry insider said.
Due to such corruption, not only the insurance companies are being deprived of the premium of about Tk 40,000 million annually but the government is also losing huge revenue, industry insiders said.
Moreover, an unhealthy competition continued to affect the Bangladesh insurance sector, relatively a small market overburdened with a large number of insurance companies.
Experts believe that the Bangladesh insurance market size can accommodate only 8 to 10 private companies, but now as many as 76 private companies remain operative in the market. As a result, the fixed earning from commission cannot be ensured among the companies, hampering the governance of the insurance industry.
There are 78 insurance companies in the country. Of them, 46 are non-life insurance companies and 32 life insurers. Of the total, only two are state-run insurers.
According to the latest figures, compiled by Bangladesh Insurance Association, the total premium income of private sector life insurance companies increased from Tk 70,954 million in 2016 to Tk 77,318 million in 2017. The total assets of the private sector life insurance companies stood at Tk 370,565 million in 2017 as against Tk 327,676 million in 2016.
Moreover, the public confidence in this highly potential sector is being eroded gradually due to the prevalence of such gross anomalies and corruption.
Such digitisation in the country's poor and weak insurance sector is being taken as part of implementation of National Insurance Policy-2014.
This initiative is targeted to play an effective role in strengthening the financial base of insurance companies through ensuring better services, transparency in insurance management and accountability without incurring any setup and implementation cost for similar systems.
When asked about the expenditure, IDRA member Dr. M Mosharraf Hossain said, despite all companies were urged repeatedly to become independent in information technologies it was not possible to accomplish individually due to huge expenses.
To implement UMP by setting up software systems, servers, hardware, data center, database, data formatting, portals etc and perform related processes, a professional third party has been engaged by IDRA.
Each insurance company will pay Tk 8.0 per quarter per policy to IDRA for this service.
When asked about the fool-proof security of information, he ensured that all data of insurance companies will be kept under IDRA and no third party has any chance to use customer insurance information.
According to IDRA, upon implementation of UMP, chances of harassment on part of the clients by the agents and companies with ill-motive will be much lessened. As all the information of insurance industry will be kept at the central database of IDRA, hence the transparency and accountability of the companies will be heightened to a greater extent. Besides, customers will not avail any service of the company or agents without receiving any notification.
Welcoming this endeavour of IDRA, B M Yusuf Ali, president of Bangladesh Insurance Forum and Managing Director of Popular Life Insurance told the FE that at present only few companies are providing the SMS notification to the clients on their own. If the same is forwarded by the regulator itself then the acceptability will be much wider.
"IDRA will also be able to keep records of all companies. Moreover, the companies will generate more businesses as well if the new move is properly implemented," Mr B M Yusuf Ali said.
When contacted, Green Delta Insurance Company Ltd said: "The initiative of IDRA is praiseworthy. However the entire process and cost needs to be reviewed considering the clients data confidentiality and per policy SMS charges. Many of the insurance companies (including ours) have either already implemented such SMS alert services or in the process of implementing this by themselves. Hence, it may be a repetition of the same task."

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