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Reforms raise hope of insurance renascence
Interview with the Financial Express
Friday, 1 March 2024
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Fresh regenerative course may usher in new era for Bangladesh insurance industry, IDRA chairman Mohammad Jainul Bari says in an interview with the Financial Express
Following is the excerpt
Q: How effective do you think the current initiatives and campaigns are in promoting insurance awareness on the National Insurance Day?
Ans: To mark the National Insurance Day 2024, the Insurance Development and Regulatory Authority (IDRA), in conjunction with insurance companies and other government agencies, has undertaken a number of additional initiatives designed to promote insurance awareness among the masses.
In this context, the IDRA has planned to adorn streets with placards, banners, and festoons, illuminate important places in Dhaka, run TV commercials and talk-shows highlighting benefits of insurance, display posters and banners on insurance in all upazillas outside Dhaka city, and send SMS on the mobile phone for mass awareness.
The campaign trails also include focusing insurance awareness through social media platforms like the facebook, YouTube etc, essay contest on insurance and so on.
The very objectives of the initiative are to reach maximum people possible and to develop public awareness of protection that insurance guarantees. A few months back, we made way for introducing Bancassurance for the first time in Bangladesh. HE Sheikh Hasina, Prime Minister of Bangladesh, is expected to inaugurate Bancassurance on the occasion of the National Insurance Day, making it a new era for Bangladesh insurance industry.
Bancassurance is a symbiosis between banks and insurance companies, which seeks to utilize the powerful distribution channels and trust associated with banks to sell insurance products. Now banks will be able to contribute to insurance literacy and awareness among bank clients. Once in operation, this will definitely help to raise public awareness of insurance.
In addition, we also brought a number of regulatory reforms targeting insurance policyholders' protection. I believe that these recent initiatives and campaigns, and the way they are designed, will definitely promote insurance awareness among people.
Q: Do you believe National Insurance Day contributes to an increased understanding of insurance products and services among members of the public? Please explain how.
Ans: Definitely, National Insurance Day has positive role in increasing understanding of insurance products in many ways. Firstly, it is a national day which means it has special attraction both to people, stakeholders, and other agencies. On this day, Prime Minister Sheikh Hasina used to inaugurate the day's programme which has profound impact on the people. Secondly, IDRA and insurance companies run special campaign for developing public awareness and trust on insurance. Thirdly, a number of TV commercials and talk-shows are made on air on this day which definitely makes people aware of insurance.
So, I believe the National Insurance Day has significant contribution towards understanding of insurance products and services by general public.
Reforms raise hope of insurance renascence
Q: Are there any specific challenges or barriers that need to be addressed to enhance Bangladesh's insurance penetration?
Ans: I think low insurance penetration is more commonly an outcome of a complex interplay of factors such as lack of accessibility and affordability, and poor financial literacy. In Bangladesh, historically, low penetration was evident. A widespread trust deficit coupled with insufficient insurance literacy still acts as a formidable barrier to insurance penetration. Absence of trust erodes the confidence of prospective policyholders, discouraging them from engaging with insurance products and services.
Also, a large protection gap exists in our country. A recent study by Deloitte found protection gap to be more than seven times of GDP in Bangladesh. Another concern is traditional distribution channel which is holding back insurance penetration. The inadequate use of digital channels also acts as an impediment in achieving seamless engagement with the customers. Also, non-availability of diversified and innovative insurance products is another problem. This in many cases results in wrong insurance selling and unsatisfactory settlement experiences, which creates negative impact on penetration. Customized products and innovation are necessary for unlocking under-penetrated segments, especially among the younger population.
Q: How do you think insurance companies, regulators, including Bangladesh Bank and other stakeholders can collaborate to make the bancassurance model more successful?
Ans: Bancassurance is teamwork between two regulated industries: insurance and banking. It has been in existence in Europe since 1970 and came to India a couple of years back, but it is new to our country. Financial Institutions Division, IDRA, and Bangladesh Bank have worked closely in formulation of Bancassurance-related regulations. Banks and insurance companies also made their valuable inputs in this process. We believe, at this initial stage, this financial product is in good shape. However, complete adaptation and seamless operation may take some more years, and technical glitches, if surfaced, may require to be addressed. IDRA and other regulators as well as stakeholders all are committed to working together to make Bancassurance a success.
Q: What suggestions do you have for improving awareness about insurance in Bangladesh?
Ans: My suggestions would be to have a comprehensive plan for increasing public awareness which should comprise designing an effective campaign using various media, especially social media and digital platform, initiatives for spreading finical literacy among people in collaboration with regulators, insurers, development partners, and other government agencies, besides innovation.
At this point I must say that innovative insurance products like Bangabandhu Suraksha Bima and Bangabandhu Sikksha Bima, which are affordable and people-friendly, are contributing a lot in making people aware of insurance.
Q: How can technology be leveraged to enhance people's awareness of insurance in Bangladesh?
Ans: Technology is the game changer in this era of information and insurance industry and regulator can avail of this in expanding insurance awareness. Insurtech has now become a buzzword in the insurance industry due to its immense potential. It can be used to bridge the gap by leveraging technology to offer affordable and accessible insurance products to low-income customers, customer in remote areas.
In the old days, physical presence was the only way of reaching the end and now, with availability of mobile phones, including smart phones, internet and other digital platforms, touch points have increased. This can be systematically used for building awareness. Data analytics and AI can be employed for risk assessment and affordable product pricing, thus attracting untapped consumers through enhanced awareness building.
Technology-based digital marketplace or embedded insurance- distribution models can be used in increasing access points for the end customers. Such digital marketplace can offer wider choices of suitable products from different insurance companies to choose from and embedded insurance models can provide access to insurance by bundling insurance with another product or service. Thus, technology helps offer customers the flexibility of purchasing insurance coverage when they need it, thereby providing more affordable and accessible insurance for the new- to-insurance target population.
Recently, the IDRA has introduced 'Regulatory Sandbox Guidelines' which allows Insure-Tec startups to develop technological platform, Apps etc and put them in operation in an accelerated way bypassing traditional framework.