Unfair competition, scams major barriers to growth of insurance coverage: BIA chief

Unfair competition among insurance companies and issues of non-compliance of some entities are major barriers to the healthy growth of insurance penetration in Bangladesh, said Sayeed Ahmed, president of the Bangladesh Insurance Association (BIA).

"We will talk to policymakers to stop the unfair competition as it will further trouble the sector," said the newly elected BIA president. The insurance sector has huge potential but non-compliance is another big problem, he added.

Mr Ahmed spoke at the 'CMJF Talk' as chief guest, organised by the Capital Market Journalists Forum (CMJF) at the CMJF Auditorium in the capital on Tuesday. CMJF President SM Golam Samdani Bhuiyan presided over the event conducted by its General Secretary Abu Ali.

At present, the total number of insurance companies is 80 (45 general insurers and 35 life insurers), while they have only 18.9 million customers in total.

Highlighting the prospects of the sector, Mr Ahmed said the country's economy has been growing rapidly, but the insurance sector has not grown at the expected level.

"Despite industrialization, increasing per capita income and extended life expectancy, our insurance industry has not yet achieved its full potential," said Mr Ahmed, also chairman of Global Insurance.

Referring to insurance coverage in Bangladesh, he said, "We are lagging behind many countries, including Sri Lanka, Pakistan and India."

General public and even businessmen do not fully understand the importance of insurance in risk management, said Mr Ahmed. Although policy reforms are underway, better coordination between policymakers and insurers is needed to increase effectiveness and credibility.

Mr Ahmed insisted that the use of digital technology must increase to bring customers under insurance coverage more easily and effectively.

The sector is currently navigating various challenges, including high inflation, which hinder its development. It has also been facing public distrust after directors of many companies left the country, siphoning off customers' money.

In a query, Mr Ahmed, said some companies, particularly life insurers, had bought assets with funds received from customers.

When the insurance schemes matured after 10 to 15 years, they were reluctant to sell assets to settle customers' claims.

"If needed, we will force them to sell assets to settle claims timely."

The newly-elected BIA committee will work towards regaining public confidence, said the committee chief.

"Those who committed crime by looting people's money should be punished."

Mr Ahmed proposed resolving VAT/tax related issues, making motor insurance compulsory, allowing reinsurance in the private sector, removing double taxation and a reduction in tax rates.

The BIA president also urged the government to make insurance of government and privately-owned immovable and movable assets mandatory. "The government has a greater role in the development of the sector," he said.

Since its inception in 1988, BIA never had an elected leadership until the election in February this year.

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