Mr. Md. Kazim Uddin The insurance sector of the country though quite old has not been able to make penetrations up to the desired level. This is far more true in the case of life insurance. The Financial Express recently talked to Mr. Md. Kazim Uddin, chief executive officer of National Life Insurance, on the problems and prospects of the sector. Excerpts of the interview follow:
Question (Q): Compared to the past, to what extent the trust and confidence of the general public has increased on insurance?
Md. Kazim Uddin (MKU): At one time, insurance companies used to collect premiums as against the issuance of handwritten receipts In some cases, this would have complicated customer service. But now the time has changed. Insurance companies in digital Bangladesh are also going digital. Now digital receipt is being given against premium payment. That is, as soon as the customer submits the premium, an SMS is sent to his/her mobile phone. IDRA also provides policy information to customers through SMS. Thus, the customer can be sure about the deposit of his premium. As a result, trust is increasing.
Q: The rate of life insurance subscribers is very insignificant compared to the population of the country. Insurance coverage rates are much higher in many countries of the world, including neighboring countries. Why are the people of Bangladesh unwilling to take insurance?
MKU: Although the country has a huge population, the rate of insurance customers in Bangladesh is very low. About 5 per cent of our total population is covered by insurance. Contribution of Insurance to Gross Domestic Product (GDP) only 0.45 per cent. In some developed world this rate is close to 100 per cent. Insurance contribution to the GDP of our neighbouring country India is also 4.2 per cent. Nepal, Thailand and other countries are also quite satisfactory. Lack of customer confidence and awareness are the major reasons behind the backwardness of the insurance sector in our country.
Lack of proper knowledge about the benefits of insurance and various negative campaigns or disinformation about insurance is holding the sector back.
Due to this, the insurance industry in Bangladesh has not expanded rapidly. Because of this common people are not interested in taking insurance policy.
But the hope is that people's confidence in insurance is being created as a result of various steps taken by the government and IDRA. Especially with the formulation of Insurance Act 2010 and National Insurance Policy 2014, ensuring accountability of insurance companies and observing National Insurance Day across the country on state initiatives, the confidence of the common people in insurance is increasing.
However, to make people interested in insurance, insurance companies need to improve the quality of customer service and timely payment of insurance claims.
Q: How much do you see the future potential of the newly introduced bancassurance?
MKU: Bancassurance has a huge potential in Bangladesh. The introduction of bancassurance is a landmark step. Bancassurance will make insurance more accessible to the people and expand the financial security of the people. Out of the current 180 million people in Bangladesh, 100 million people are adults. But among these 100 million working people, less than 100 million are covered by insurance.
It is hoped that through bancassurance, public confidence in insurance will increase and penetration in insurance will increase significantly.
Our neighbouring country India has an insurance take-up rate of about 55 per cent through bancassurance and about 45 per cent insurance take-up through agencies and other channels.
India's SBI Life Insurance alone earned Rs 178.30 billion through bancassurance out of their gross premium earned of Rs 295.9 billion in 2022, which is 60 per cent of their gross premiums.
If we can advance bancassurance through comprehensive planning, we will also have huge premium income
It will be possible which will play a major role in the economic development of the country. State your assessment of insurance claim payouts
Q: Your evaluation about claims settlement?
MKU: Insurance Day is observed every year to encourage payment of insurance claims. Insurance claim settlement not only benefits the concerned customer but also the entire insurance industry. When insurance claims are paid, interest and confidence of the general public in insurance increases rapidly.
For this, the companies have to take measures to pay the insurance claims quickly after the expiry date. Claims should be settled expeditiously without delay in the name of procedural proceedings.
Involving dignitaries including local public representatives in issuing claim checks will remove negative perceptions of insurance and create a positive image which will help in generating new customers.
It is specifically noted here that National Life paid claims of Tk 10.93 billion in 2023. In 2023, we have been able to earn a total premium of Tk 18.64 billion.
Q: According to the latest data, what are the total number of policies sold by your organisation, the number of customers, number of claims paid and amount, claim settlement rate, life fund, current investment?
MKU: At the end of 2023, the number of insurance policies sold by National Life is 6.459 million, total premium earned is Tk 168.46 billion, life fund is Tk 52.76 billion, investment is Tk 52.96 billion and total assets are Tk 6 0.41 billion. Moreover, in 2023, the total claim paid is Tk 98.77 billion.
Around 95 per cent of our life funds are invested in various sectors including 38 per cent in government treasury bonds.
Life fund money has been properly invested for the last 39 years to maintain the company's financial base and ability to pay customer claims.
National Life has never experienced a financial crisis in the past, nor is it likely to do so in the future. Life Fund is growing at a significant rate every year. For this National Life today stands on sound financial footing.
Q: How do you evaluate the role of the Bangladesh Insurance Association in the development of insurance sector?
MKU: Bangladesh Insurance Association (BIA) is making an important contribution to the development and expansion of the insurance sector. Since the formation of BIA, the organisation has been working as one of the partners of regulatory agencies in the development and problem solving of the insurance industry. All the former leaders of the organisation have contributed significantly to the development of the insurance industry. Especially the current president of BIA Sheikh Kabir Hossain's prudent and visionary thinking, the insurance sector of Bangladesh has progressed a lot.
BIA is involved in the overall development of the insurance industry including the formation of IDRA, introduction of new insurance laws and National Insurance Day. One of the contributions of BIA is the awarding of National Awards to companies on National Insurance Day by BIA.
Q: What kind of initiatives do you think the regulatory body should take to develop the insurance sector?
MKU: Insurance Development and Regulatory Authority has been playing a significant role in the overall development of the insurance sector. Still, I think there is a need for the organisation to take some more steps for the development of this sector. In particular, the IDRA has to supervise the life insurance companies to ensure that the life fund money is invested in government treasury bonds as per the IDRA guidelines. If life fund money is properly invested, companies should not face any problem in paying insurance claims. As a result, transparency will be ensured.
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