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Tuesday, 23 April, 2024

Lack of transparency hinders the growth of the insurance sector: B M Yousuf Ali

B M Yousuf Ali, the CEO of Popular Life Insurance Company Limited is also the President of Bangladesh Insurance Forum.
Express Report
  04 Jan 2024, 03:48

Lack of professionalism and transparency in some life insurance companies sparks gloomy signal to the proper growth of the country’s fast-growing life insurance sector.

B M Yousuf Ali, the CEO of Popular Life Insurance Company Limited and also the President of Bangladesh Insurance Forum told THE BANGLADESH EXPRESS recently in a report series named Growth Talks.

While a culture of efficient insurance claim settlements has been developing in the country thanks to the initiatives of IDRA over the years, many life insurance claims are still not settled on time due to long-standing mismanagement in some companies.

“This is distorting public trust in the overall insurance sector and hinders the growth of potential life insurance sector. Here regulators as well as public watchdog bodies like newspapers and media should pay more attention and play their due roles to aware consumers”, B M Yousuf Ali said.

“I believe that good journalism can make our world a happier place. In the insurance sector where consumer concerns and investor rights are linked to economic growth, journalism should not remain silent”, the CEO of Popular Life Insurance Company Limited said.

He said the relationship between customers and insurance companies is marked by a lack of trust. A majority of Bangladeshi people do not trust insurance agents, and there is limited awareness regarding life insurance products.

“Firstly, claim settlement-related problems 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 fields are needed”, Yousuf Ali explained.

However, he continued, the situation has improved a lot after IDRA formulated a complaint cell for quick settlement of customer complaints regarding insurance claims.

“Customers can now complain online or through letters to this cell”, he said noting that instead of calling or emailing, customers can quickly send a direct message or tweet when something goes awry.

“Instances of fraud by unscrupulous circles in the sector will be reduced if the general public is made aware of insurance. Here the role of media is immense”, he said.

The burgeoning insurance sector, a pivotal player in the nation's economic landscape, demands an increased focus from regulatory bodies and media watchdogs alike. Ali expressed his concern over the prevailing lack of professionalism in certain companies, casting a sombre shadow on the sector's promising potential, he said.

“I see the role of media as a catalyst for industry and market growth. In the life insurance sector, where I am working, social media allows policyholders to connect directly with their insurance company without using traditional customer service channels”, he said.

“Journalists are more industry-friendly and they are helping us by playing their watchdog roles. That is why, the country’s life insurance sector is growing day by day driven by more consciousness among people created by the press and media”, B M Yousuf Ali said.

During the impactful Growth Talks series, B M Yousuf Ali, the visionary CEO of Popular Life Insurance Company Limited and the esteemed President of Bangladesh Insurance Forum, shed light on the imperative need for heightened regulatory scrutiny and vigilant oversight from public watchdog entities.

The average per capita spending on insurance increased by 13% to USD 166 in 2017 in emerging markets while the average insurance penetration rose by 3.3% as premium growth continued to outpace GDP growth within these economies. Life insurance constitutes 73.5% of Bangladesh’s insurance market and non-life insurance, 26.5% while micro-insurance and Islamic insurance (takaful) are also a part of Bangladesh’s insurance sector.

During that time, the assets of all insurance companies in Bangladesh stood at USD 5,810.61 million by the end of 2017, with an average growth rate of 13.83% from 2009 as investments in both life and non-life insurance companies grew at an average rate of 14.95%, with returns increasing from 8% to 11.5%.

The life insurance sector has a competitive landscape, with market share being closely distributed among multiple players.

B M Yousuf Ali, also the President of Bangladesh Insurance Forum sees the country’s insurance sector is growing day by day with a total of 81 companies, both public and private driven by impressive reform measures.



“The most significant development has been made recently by Prime Minister Sheikh Hasina, the daughter of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman, who was also an insurance professional by rolling out the much-anticipated universal pension scheme”, he said.

The government’s pension scheme mainly aims at bringing the growing elderly population of the country under a well-organised social safety net and providing them with a monthly stipend to support their daily expenses, he noted.

“It has started building trust among people who are still outside the insurance coverage due to a lack of awareness and regulatory weakness. Less than 20 million people out of the country's total population of approximately 170 million have taken out insurance policies over the last 50 years, as the sector has failed to earn people's trust despite its long history”, B M Yousuf Ali said.

“One of the main reasons is that many customers have suffered losses due to the dishonesty and fraud of insurance policy sales agents, and the commission-based payment system for these agents has been revoked”, he explained.

“The reasons are mainly the public's lack of confidence in insurance companies the absence of government monitoring and supervision and some complexities involved in settling insurance claims for customers”.

From a macroeconomic perspective, the CEO explained, Bangladesh suffers due to uneven income distribution where a majority of 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.

Although the country’s insurance sector has witnessed some growth, in comparison with other emerging nations, the CEO said, there is a lot of room for improvement. According to the Seventh Five Year Plan (2016–2020) of the government, a majority of the population across product segments (life and non-life) remains untapped by the insurance market. Compared to its South Asian counterparts, Bangladesh has the lowest premium per capita.

 

Globally, Yusuf Ali explained, the insurance sector has been undergoing digitisation and platforms are being created to optimise 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.

The government has taken a set of reform measures that have built public trust and helped companies to grow further.  One of the great reforms is the replacement of abolition of Directorate of Insurance by the establishment of IDRA in 2011, a stronger regulatory body, he said.



To draw people's attention to the insurance sector, the government has declared 1 March as National Insurance Day. Since then, various programmes, including awareness campaigns on insurance services, have been organised on this day every year throughout the country.

Besides, he continued, IDRA has been organising insurance fairs in the divisional towns of the country since 2016. The process of organising these sorts of fairs at the district level of the country is underway.

In order to improve the capacity, transparency, and accountability of insurance companies, listing in the stock market has been made mandatory. Here, the CEO said, media and journalists can help all to foster reform measures by acting as catalysts for awareness, trust, and transparency.

Through informative articles, investigative reporting, and expert analysis, they can educate the public about the importance of insurance in safeguarding their future. Highlighting success stories and sharing real-life examples of insurance benefits can inspire confidence in potential policyholders.

Furthermore, journalists can scrutinize the insurance industry, ensuring fair practices and ethical standards, which in turn enhances trust among consumers. By serving as a bridge between insurers and the public, the media can play a pivotal role in expanding the reach and impact of the insurance sector in Bangladesh by raising awareness among the people.

However, media coverage can also disseminate harmful information that tarnishes reputations, lowers sales, and leads to declining share prices. So, knowledge, skills, access to information and press freedom are imperative to achieve tangible results, which Mr. Faruk Ahmed also mentioned in his Keynote paper.

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Lack of transparency hinders the growth of the insurance sector: B M Yousuf Ali

B M Yousuf Ali, the CEO of Popular Life Insurance Company Limited is also the President of Bangladesh Insurance Forum.
Express Report
  04 Jan 2024, 03:48

Lack of professionalism and transparency in some life insurance companies sparks gloomy signal to the proper growth of the country’s fast-growing life insurance sector.

B M Yousuf Ali, the CEO of Popular Life Insurance Company Limited and also the President of Bangladesh Insurance Forum told THE BANGLADESH EXPRESS recently in a report series named Growth Talks.

While a culture of efficient insurance claim settlements has been developing in the country thanks to the initiatives of IDRA over the years, many life insurance claims are still not settled on time due to long-standing mismanagement in some companies.

“This is distorting public trust in the overall insurance sector and hinders the growth of potential life insurance sector. Here regulators as well as public watchdog bodies like newspapers and media should pay more attention and play their due roles to aware consumers”, B M Yousuf Ali said.

“I believe that good journalism can make our world a happier place. In the insurance sector where consumer concerns and investor rights are linked to economic growth, journalism should not remain silent”, the CEO of Popular Life Insurance Company Limited said.

He said the relationship between customers and insurance companies is marked by a lack of trust. A majority of Bangladeshi people do not trust insurance agents, and there is limited awareness regarding life insurance products.

“Firstly, claim settlement-related problems 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 fields are needed”, Yousuf Ali explained.

However, he continued, the situation has improved a lot after IDRA formulated a complaint cell for quick settlement of customer complaints regarding insurance claims.

“Customers can now complain online or through letters to this cell”, he said noting that instead of calling or emailing, customers can quickly send a direct message or tweet when something goes awry.

“Instances of fraud by unscrupulous circles in the sector will be reduced if the general public is made aware of insurance. Here the role of media is immense”, he said.

The burgeoning insurance sector, a pivotal player in the nation's economic landscape, demands an increased focus from regulatory bodies and media watchdogs alike. Ali expressed his concern over the prevailing lack of professionalism in certain companies, casting a sombre shadow on the sector's promising potential, he said.

“I see the role of media as a catalyst for industry and market growth. In the life insurance sector, where I am working, social media allows policyholders to connect directly with their insurance company without using traditional customer service channels”, he said.

“Journalists are more industry-friendly and they are helping us by playing their watchdog roles. That is why, the country’s life insurance sector is growing day by day driven by more consciousness among people created by the press and media”, B M Yousuf Ali said.

During the impactful Growth Talks series, B M Yousuf Ali, the visionary CEO of Popular Life Insurance Company Limited and the esteemed President of Bangladesh Insurance Forum, shed light on the imperative need for heightened regulatory scrutiny and vigilant oversight from public watchdog entities.

The average per capita spending on insurance increased by 13% to USD 166 in 2017 in emerging markets while the average insurance penetration rose by 3.3% as premium growth continued to outpace GDP growth within these economies. Life insurance constitutes 73.5% of Bangladesh’s insurance market and non-life insurance, 26.5% while micro-insurance and Islamic insurance (takaful) are also a part of Bangladesh’s insurance sector.

During that time, the assets of all insurance companies in Bangladesh stood at USD 5,810.61 million by the end of 2017, with an average growth rate of 13.83% from 2009 as investments in both life and non-life insurance companies grew at an average rate of 14.95%, with returns increasing from 8% to 11.5%.

The life insurance sector has a competitive landscape, with market share being closely distributed among multiple players.

B M Yousuf Ali, also the President of Bangladesh Insurance Forum sees the country’s insurance sector is growing day by day with a total of 81 companies, both public and private driven by impressive reform measures.



“The most significant development has been made recently by Prime Minister Sheikh Hasina, the daughter of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman, who was also an insurance professional by rolling out the much-anticipated universal pension scheme”, he said.

The government’s pension scheme mainly aims at bringing the growing elderly population of the country under a well-organised social safety net and providing them with a monthly stipend to support their daily expenses, he noted.

“It has started building trust among people who are still outside the insurance coverage due to a lack of awareness and regulatory weakness. Less than 20 million people out of the country's total population of approximately 170 million have taken out insurance policies over the last 50 years, as the sector has failed to earn people's trust despite its long history”, B M Yousuf Ali said.

“One of the main reasons is that many customers have suffered losses due to the dishonesty and fraud of insurance policy sales agents, and the commission-based payment system for these agents has been revoked”, he explained.

“The reasons are mainly the public's lack of confidence in insurance companies the absence of government monitoring and supervision and some complexities involved in settling insurance claims for customers”.

From a macroeconomic perspective, the CEO explained, Bangladesh suffers due to uneven income distribution where a majority of 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.

Although the country’s insurance sector has witnessed some growth, in comparison with other emerging nations, the CEO said, there is a lot of room for improvement. According to the Seventh Five Year Plan (2016–2020) of the government, a majority of the population across product segments (life and non-life) remains untapped by the insurance market. Compared to its South Asian counterparts, Bangladesh has the lowest premium per capita.

 

Globally, Yusuf Ali explained, the insurance sector has been undergoing digitisation and platforms are being created to optimise 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.

The government has taken a set of reform measures that have built public trust and helped companies to grow further.  One of the great reforms is the replacement of abolition of Directorate of Insurance by the establishment of IDRA in 2011, a stronger regulatory body, he said.



To draw people's attention to the insurance sector, the government has declared 1 March as National Insurance Day. Since then, various programmes, including awareness campaigns on insurance services, have been organised on this day every year throughout the country.

Besides, he continued, IDRA has been organising insurance fairs in the divisional towns of the country since 2016. The process of organising these sorts of fairs at the district level of the country is underway.

In order to improve the capacity, transparency, and accountability of insurance companies, listing in the stock market has been made mandatory. Here, the CEO said, media and journalists can help all to foster reform measures by acting as catalysts for awareness, trust, and transparency.

Through informative articles, investigative reporting, and expert analysis, they can educate the public about the importance of insurance in safeguarding their future. Highlighting success stories and sharing real-life examples of insurance benefits can inspire confidence in potential policyholders.

Furthermore, journalists can scrutinize the insurance industry, ensuring fair practices and ethical standards, which in turn enhances trust among consumers. By serving as a bridge between insurers and the public, the media can play a pivotal role in expanding the reach and impact of the insurance sector in Bangladesh by raising awareness among the people.

However, media coverage can also disseminate harmful information that tarnishes reputations, lowers sales, and leads to declining share prices. So, knowledge, skills, access to information and press freedom are imperative to achieve tangible results, which Mr. Faruk Ahmed also mentioned in his Keynote paper.

Comments

Bangladesh now the best in the global RMG sector: Faruque Hassan
AL places pragmatic, comprehensive & inclusive manifesto: Dr Atiur
Bangladesh Lighting the Path Through Dedication to Power: Power Chief
To keep economic growth, we must reduce road accidents: BARVIDA leader