Restive politics puts a damper on insurers’ premium income

The country's insurance sector was affected severely by the heightened political tensions and sluggish economic growth in the last calendar year (CY).
Premium income of the country's insurance companies declined by 6.15 per cent to Tk 76.785 billion (7678.5 crore) in 2013 from Tk 81.818 billion of the previous year, according to the Insurance Development and Regulatory Authority (IDRA). About 83.71 per cent of the premium income came from life insurance policies in the year.
The IDRA data shows premium income of life and non-life insurance companies dropped to Tk 64.280 billion and Tk 12.505 billion in 2013 from Tk 65.871 billion and Tk 15.947 billion in 2012.
Sources said the premium income growth rate slowed last year because of the sluggish economic growth and the political uncertainty preceding the last January 5 general election boycotted by the BNP-led opposition alliance and other parties.
During the period many potential insurance policy holders chose to wait in view of the prevailing political situation then driving down the growth in premium income, sector insiders said.
The insurance sector did not do very well as profits were hit by the sluggish economic growth and political uncertainty in the year, sources concerned said.
"The political unrest unleashed by the opposition parties last year has severely affected the country's overall insurance business," Sheikh Kabir Hossain, president of Bangladesh Insurance Association (BIA), told the FE Friday.
"The earnings of the sector were mostly dependent on the country's exports and imports. The last calendar year's business scenario worsened on the political parties' shutdown and blockade programmes. As a result, the premium income-both life and non-life-significantly dropped," he added.
Non-life insurers offer products like fire insurance, marine cargo insurance, marine hull insurance and engineering and motor insurance. But the insurance business in those areas was in dire straits, said the sector insiders while talking to the FE Friday.
Drop in exports and imports also affected the business, as the volume of marine insurance dropped resultantly, they said.
On the other hand, a large number of businesses avoided insurance coverage following their poor business performance due to the political turmoil, a top official of a private insurance company said.
Mr Kabir, however, expressed hope that the growth of the sector would be better in 2014, if the country's overall situation remains peaceful.
"But, the IDRA has to take proper initiatives in this connection and we also have to cooperate with the state entity for boosting the sector in the days to come," he added.
He said most of the insurance companies faced serious financial crises last year due to the slow business growth in the sector. Export business in different areas, especially in the ready-made garment (RMG) sector, suffered severely putting a damper on the insurance business also in 2013.  
There are 45 non-life insurance companies, 30 life insurance companies and two state insurance companies operating in the country.