Tapping potentials of insurance for UHC

Bangladesh Insurance Industry has unlimited possibilities for development and protection. The role of insurance in managing the risks in an economy is an important one as far as growth and prosperity are concerned. In a micro-economic perspective on the one hand, insurance safeguards individuals, households and companies from numerous risks, on the other hand, if seen from the macro-economic perspective, it reduces the financial burden for government within an inclusive protection approach and creates a stable environment in which businesses can thrive for the potential economic success. The government has taken some enormous steps on the path to economic prosperity, now the role of insurance sector is very vital that requires considerable attention and investment from various stakeholders as line with the positive regulatory support. A resilient insurance sector can help to curb unemployment as well. If adequate training and education are available, young graduates will be able to find various career opportunities in the insurance sector.
At present, 79 insurance companies operate their activities in Bangladesh. Of them, 33 are life and 46 non-life insurers. The contribution of insurance companies to the GDP of Bangladesh is less than one percent (0.60%). An increase in the penetration rate can create widespread benefits for the economy. It is estimated that 1% increase in Bangladesh’s insurance penetration rate can reduce uninsured losses and markedly contribute to its GDP growth. According to World Bank statistics, out of 1000 people only 4 are have life insurance policies in Bangladesh is one of the lowest penetration in the world. Even the non-life insurance has a negligible contribution. Hence, there is a very high potential of insurance business in Bangladesh. We are very optimistic that the government has taken various initiatives with priority and understood the necessity of the insurance industry. Thus, it has brought the sector under the Ministry of Finance which was earlier under the Ministry of Commerce. Parliament passed “The Insurance ACT, 2010” and “The Insurance Development & Regulatory Authority (IDRA)” was formed under this act during the Year 2011. The Authority is working for systematic development and regulations for the insurance industry with a view to implement “The National Insurance Policy 2014”. In this priority, the government has announced “The National Insurance Day” which is celebrated on the First March every Year and we’ve observed it for first time on March 01 last year.
Various challenges underlie the limited growth of Bangladesh’s insurance sector. The relationship between customers and insurance companies is marked by lack of trust. According to a recent study by PwC, the vast majority of Bangladeshi people do not trust insurance agents, and there is limited awareness regarding life insurance products. Claim settlement-related problems also undermine the customer-insurer relationship, and the process of settling claims can be arduous and long. Secondly, Bangladesh lacks potential employees with adequate skills and knowledge to provide insurance services of the highest standard. In particular, employees holding advanced degrees in relevant field, the people are poor and do not have the disposable income to afford insurance. This hinders the growth of the country’s overall insurance penetration rate. Moreover, the country’s technological capacities need major advancement. Globally, the insurance sector has been undergoing digitization and platforms are being created to optimize customer service and streamline processes. In contrast, in Bangladesh, there is limited utilisation of modern technology and processes. Insurance companies do not have access to accurate and up-to-date demographic statistics for actuarial computations. Lastly, the regulatory environment in Bangladesh leaves much to be desired. Despite various challenges, Bangladesh’s insurance sector has tremendous potential for growth, especially given the country’s favourable macroeconomic picture. Regulatory reforms and the introduction of bancassurance, health, expatriate, agriculture, education, coastal, and public pension insurance products along with deep distribution channels can catalyze growth in the insurance sector. Regulations that focus on reducing the risk of insolvency can help build trust in the market at a global level, which in turn will increase the flow of funds into the economy. [Source: Potential for growth: Transforming Bangladesh’s Insurance Sector; published by pwc in June 2019]
Since the government has signed up for “Health for All” when the country is struggling to achieve Universal Health Coverage (UHC). Efforts are on to remove the rural-urban and poor-rich gap creating provisions for health care financing for rural population particularly for the poor. There is a general acceptance that universal health insurance is not feasible at this moment in Bangladesh. But insurance companies can find the ways and means to develop appropriate strategies for risk pooling schemes tailored to the needs of particular communities that makes feasible the UHC through health insurance protection. As a commercial insurer, it requires to understand the demand, affordability and availability of service providers to ensure insurance facilitates to the different community of people. We understand that the high cost of health care services means that health insurance can only be made sustainable through high premiums that may surpass the insured and his/her ability to pay. At the same time majority of the population cannot manage to meet the high cost of health care without insurance. Moreover, due to lack of public awareness, health insurance is considered to be a non-profitable business. But by creating public demand for the necessity of insurance services through awareness, availability, affordability and partnership with health service providers can ensure the universal health coverage for the masses. Insurance can make it profitable under its social business potentials with the help of health service providers and development partners.
A Social Health Protection Scheme through Insurance can cover the UHC across the country. To implement it, a well-designed insurance plan can be developed considering the following points:
Affordable insurance premium: Insurance Company can develop a health insurance product with a discounted value so that it can be affordable for the customer to cover inpatient/out-patient/maternity benefits for the masses across the country;
Partnership with various stakeholders for inclusion of mass community: To ensure the access of the masses to the essential health services, we need to have a partnership among the various stakeholders such as local govt. authorities; health service providers and insurance companies. Thus is necessary to bring the mass people under the insurance coverage;
Health care financing through project sponsors: For a successful health care inclusion programme, we need a contribution from a project sponsor such as local govt. international donor/aid organisations (UNDP, UNICEF, etc.) of health care service networks and inclusion of participants through usage and experiences;
Availability of health service provider: Providing cashless facility for health insurance and discounted price for service items from the health service providers can help this health service scheme into a sustainable model to ensure the UHC to the mass community.
Insurance Company can commit and offer diversified health insurance products and services to the distinct customer group through a continuous innovation process with the collaboration of development partners and health service providers. It can include a team of highly qualified professionals who are specially committed and dedicated to operate such types of projects to scale up and ensure health care service for all. By this inclusive measure, the insurer can take the support from the sponsors that would result in the strengthening representation of stakeholders and raising awareness among the mass community and health service personnel, subsequently it can ensure health services with more inclusive and responsive manner through the UHC Program.
Enormous financing gap is one of the major concerns in the health sector in many developing countries and the Bangladesh case is no exception. For most people living in this part of the world “health insurance” is a little known term. It is generally assumed that, with the exception of the upper classes, people cannot afford such type of social protection. This is a pity as also poor people demand protection against the financial consequences of illnesses. For most people living in this country, illness still represents a permanent threat to their income earning capacity. Beside the direct costs for treatment and drugs, indirect costs for the missing labor force of the ill and the occupying person have to be shouldered by the household. This initiative can be aligned with a shared vision between the development partners that insurance as a risk mitigating strategy contributes significantly to the resilience of low-income households. Bangladesh in general marks high (More than 65% of total health expenditure) out-of-pocket healthcare expenditures, to which socially and economically disadvantaged communities have a fair share. An appropriately tailored health insurance product has potentials to deliver a viable health financing option to the low-income rural/urban communities, if there are sincere efforts for equitable access and quality of care. The insurance scheme being introduced as a social responsibility in partnership model builds on the solidarity of the participants/households of the community-based groups. Participation of an institutional donor contributes to the payment of premium helps the participants for the initial years; it is argued that the insured participants will continue the insurance scheme by themselves, as a result of appreciation of benefits through usage and experiences.

S M Ziaul Hoque, FLMI is chief executive officer of the Chartered Life Insurance Company Ltd.
He can be reached at
[email protected]