“The insurance sector’s share in the country’s gross domestic product (GDP) can be raised up to 10% from the current rate of 0.5% in the next 10 years, if the National Insurance Policy 2014 is properly implemented, and public awareness is created in this regard,” Managing Director and CEO of Pragati Life Insurance Limited (PLIL) Md Jalalul Azim told Ceramic Bangladesh (CB) in an exclusive interview. There is a huge potential for both life and a non-life insurance sector in Bangladesh as the country’s economy is booming. “But, we can’t exploit the potential due to image crisis, lack of proper monitoring by the Regulatory Authority, shortage of skilled manpower, and lack of awareness among many people,” Jalalul Azim said. Md Jalalul Azim Managing Director and CEO Pragati Life Insurance Limited There are a total of 82 insurance companies in Bangladesh, including 35 life insurance companies. Of these, the government has two companies– Jiban Bima Corporation and Sadharan Bima Corporation. However, the insurance sector does not flourish as per stakeholders’ expectations due to alleged violation of rules and regulations that leads to unethical practices at different levels. “We have more insurance companies compared to the need. For example, India is one of the world’s largest economies and has the highest population but there are only 52 insurance companies there.
Steps of Pragati Insurance Pragati Life Insurance Limited (PLIL) is a third generation company, and Pragati Insurance Limited (PIL) is the first generation company in the country. Considering the overall situation, Pragati Insurance companies are in a better position compared to others. Pragati General Insurance Company along with others got a license in 1985. After achieving success through dynamic activities, the company’s entrepreneurs launched Pragati Life Insurance Limited in 2000. It started with a paid-up capital of Tk 30 millionagainst an authorised capital of Tk 250 million. However, the second generation insurance came in 1990, and the fourth generation in 2013-14. Pragati have 371 branches across the country. The life insurance premium was Tk481.76 crore in 2022 and met claims of Tk315.75 crore in the same year. In view of premiums, “we are now in 7th position among 33 insurance companies. We are in the capital market too. Our share price is the second or third highest in the stock market. Every year, we pay dividends to our shareholders.” The Pragati Life Insurance CEO, Mr Jalalul Azim, said, “We pay insurance claims properly without any hassle while many companies can’t pay their customer’s claims. It seems owners of many insurance companies don’t have a proper idea about insurance operations. So, they can’t pay their client’s claims amply. As a result, a negative idea among many people has been created in our insurance sector.” Overall, he thinks, Pragati is one of the better companies in the country.
Why will people take insurance? In general insurance, clients can demand their claims after an accident. On the other hand, clients can demand the claim in both situations after the ending of insurance tenure and accident in life insurance, the Pragati CEO said. Common people get more benefits if they take insurance from reputed companies. Accidents may occur at any time in life. The victim’s family will get a handsome amount if a member takes insurance. Besides, if industrial units are burnt, ships are sunk, and airplanes are devastated from time to time and if businesses take insurance, it can overcome financial crises somewhat. Hence, there is a difference between banking and insurance systems. Banks can give a fixed profit to customers after an estimated period. But an insurance company can give a guarantee. “We do insurance over Tk. 50,000. And, if someone does insurance of Tk. 1 crore, we do Tk. 10 lakh insurance on our own and we do reinsurance at a foreign company for the rest of the amount.” As it is a Muslim-majority country, the demand for Islamic insurance is increasing. But there is a lack of skilled manpower, and policy here. There is no skilled person at the Shariah council to operate the Islamic insurance system. “We have also a service named after Takaful. A policy is very necessary for Islamic insurance.”
Insurance for ceramic manufacturers The country’s ceramic manufacturers have to import different types of raw materials to manufacture ceramic products. During the import of the materials, accidents may occur at sea or on roads. For temporary financial support from damage, businesses should take insurance, Mr Azim also said. As per the government direction, import and export businesses have to take non-life insurance during Letter of Credit (L/C) opening. However, every businessman should take the benefit as it has a priority in the globe. Lack of skilled manpower Insurance Development and Regulatory Authority (IDRA) issued a rule for appointing Managing Director (MD) and Chief Executive Officer (CEO)
but such highly qualified officials are not available in the market. Insurance-related technical departments also lack skilled manpower to operate insurance companies here. For example, Actuary is important in the insurance sector but there is only one actuary professional who is now 80 years of age. “So, our sector can’t flourish as per the potential.” There is also unhealthy competition in the industry. The government has fixed premiums for general insurance, but some companies offer commissions of up to 50 percent to customers. “There is no reinsurance company in Bangladesh. If the company does not do reinsurance how will it meet customers; claims? So they find a tricky way, he added.” Insurance companies can’t meet the claims of clients without maintaining professionalism. “IDRA installed observers in insurance companies. But if they don’t have money how they will meet the claims?” he said. To bring discipline in the sector, all companies must be brought under rules and regulations. Otherwise, public trust won’t build and develop the sector, the MD said.
Sector growth decline Despite economic growth, there is no such progress in the insurance sector. The premium of insurance companies is 0.5 percent of GDP contribution which was 1.0 percent five years ago and that means a 50 percent decrease in insurance premiums. Pragati Life Insurance received around 28% growth last year. “We have a good number of plans including digitisation in our activities to further develop our company,” the top official said.
Challenges Image crisis is the key challenge for the insurance sector while lack of awareness, skilled manpower, and government policy support are other deficiencies. “We expected that the national budget for the fiscal year 2023-24 will play a significant role in developing the insurance sector. But we don’t see such a positive initiative in the budget. High tax is a burden for us.” The Value Added Tax (VAT) should be rebated on crops and cattle insurance. “The government is insurance friendly but we see a negligence of IDRA in helping the sector to flourish. They don’t take proper action against those who do unethical practices or lack monitoring too.”
Demand for general insurance rises The demand for non-life insurance has increased in the country due to growth of industries. “But due to lack of awareness, it did not tap the potential properly yet.” As per the government rules, marine and fire insurance are mandatory in many sectors including trade or exports but life insurance is yet to be made mandatory for any sector. The incumbent government has taken several steps including the declaration of National Insurance Day and the formation of a separate regulatory body for the development of the insurance sector. “I want to lay stress on stronger regulatory authority and recruitment of the necessary workforce,” the Pragati Insurance MD said. Interviewed by Rafikul Islam
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