Beta Version Archive |

Tuesday, 23 April, 2024

Media can serve as a bridge between insurers and public

B M Yousuf Ali, CEO, Popular Life Insurance Company Ltd
  08 Oct 2023, 00:00

I'm delighted to learn that THE BANGLADESH EXPRESS in collaboration with BJFCI is going to celebrate its 30-year milestone journey through a unique dialogue of Bankers, Editors and Regulators to explore the significance of media and press freedom in fostering financial sector reform and development. This unique initiative couldn't have come at a more opportune time, as candid conversations-both in person and within the pages of our Anniversary Publication-often illuminate the path to ingenious solutions.

The subject of this dialogue is both distinctive and highly relevant in today's dynamic landscape where the media plays an increasingly vital role in driving industry and market development. Journalists have evolved into seasoned professionals who strike a balance between their watchdog responsibilities and fostering industry relationships. This transformation is both timely and noteworthy.

Napoleon Bonaparte said, "Four hostile newspapers are more to be feared than a thousand bayonets." He realized that the pen and the written word hold a great deal of power. I believe that good journalism can make our world a happier place. In the financial landscape where consumer concerns and investor rights are linked to economic growth, journalism should not remain silent. However, it should be more responsible and skilled, as any misleading information can have a serious negative impact on markets, especially during crisis periods. This concern has been documented in the keynote paper presented by Mr. Faruk Ahmed, the Editor of THE BANGLADESH EXPRESS.

Based on some study findings, Mr Ahmed mentioned that fake news is now a more significant issue than ever due to the expansion of alternative news outlets and the use of social media. This development has created many concerns, particularly in the financial markets where the negative report has a big impact on small investors. However, 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. Instead of calling or emailing, customers can quickly send a direct message or tweet when something goes awry. In Bangladesh, 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.

In emerging markets, the average per capita spending on insurance increased by 13% to USD 166 in 2017 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.

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 2009.5 Investments in both life and non-life insurance companies have grown at an average rate of 14.95% during 2009-2017, with returns increasing from 8% to 11.5% during the same period.6 The life insurance sector has a competitive landscape, with market share being closely distributed among multiple players.

The country's insurance sector, however, 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.

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. However, 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.

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 system of payment to these agents has been revoked. 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.

Various challenges underlie the limited growth of Bangladesh's insurance sector. For one, 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 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 fields are needed.

From a macroeconomic perspective, 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, 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, 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. In 2014, the National Insurance Policy was formulated through proper guidance with utmost emphasis on the discipline of the insurance companies and on ensuring people's trust. The policy has established a set of dos and don'ts, which are currently guiding the ongoing reforms in the insurance sector.

Furthermore, the IDRA has undertaken several reforms under the Capital Market Development Programme (CMDP), which is financed by the Asian Development Bank. Currently, the Bangladesh Insurance Sector Development Programme (BISDP), funded by the World Bank, is also underway, with a focus on the digital transformation of insurance services.

In an effort 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, 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.

While a culture of efficient insurance claim settlements has been developing in the country thanks to the initiatives of IDRA, many claims are still not settled on time due to long-standing mismanagement in some companies. However, IDRA has formulated a complaint cell for quick settlement of customer complaints regarding insurance claims. Customers can complain online or through letters to this cell. 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.

In order to improve the capacity, transparency, and accountability of insurance companies, listing in the stock market has been made mandatory. Additionally, the authorities have directed insurers to stop the practice of commission-based business and have set a limit on operating costs. Punitive action is being taken against those who do not comply with these rules.

In addition, IDRA has launched a Unified Messaging Platform (UMP) utilising state-of-the-art technology to establish a relationship between customers and insurers, increase accountability, provide customers with regular premium information, and create a customer database. Here, journalists can help both regulatory authorities and companies through their powerful pens.

Media and journalists can significantly promote the country's insurance business 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

Message From The Chief Guest / Fake news is a big threat in the field of Social Media Journalism
Message From The Special Guest / Journalists play an impressive role in capital market reform process
Dialogue of Bankers, Editors & Regulators / THE FINANCIAL SECTOR REFORM: The Roles of Media & Press Freedom
Is MFS really a game changer for poor?
Financial journalists should enrich their knowledge of financial matters

Media can serve as a bridge between insurers and public

B M Yousuf Ali, CEO, Popular Life Insurance Company Ltd
  08 Oct 2023, 00:00

I'm delighted to learn that THE BANGLADESH EXPRESS in collaboration with BJFCI is going to celebrate its 30-year milestone journey through a unique dialogue of Bankers, Editors and Regulators to explore the significance of media and press freedom in fostering financial sector reform and development. This unique initiative couldn't have come at a more opportune time, as candid conversations-both in person and within the pages of our Anniversary Publication-often illuminate the path to ingenious solutions.

The subject of this dialogue is both distinctive and highly relevant in today's dynamic landscape where the media plays an increasingly vital role in driving industry and market development. Journalists have evolved into seasoned professionals who strike a balance between their watchdog responsibilities and fostering industry relationships. This transformation is both timely and noteworthy.

Napoleon Bonaparte said, "Four hostile newspapers are more to be feared than a thousand bayonets." He realized that the pen and the written word hold a great deal of power. I believe that good journalism can make our world a happier place. In the financial landscape where consumer concerns and investor rights are linked to economic growth, journalism should not remain silent. However, it should be more responsible and skilled, as any misleading information can have a serious negative impact on markets, especially during crisis periods. This concern has been documented in the keynote paper presented by Mr. Faruk Ahmed, the Editor of THE BANGLADESH EXPRESS.

Based on some study findings, Mr Ahmed mentioned that fake news is now a more significant issue than ever due to the expansion of alternative news outlets and the use of social media. This development has created many concerns, particularly in the financial markets where the negative report has a big impact on small investors. However, 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. Instead of calling or emailing, customers can quickly send a direct message or tweet when something goes awry. In Bangladesh, 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.

In emerging markets, the average per capita spending on insurance increased by 13% to USD 166 in 2017 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.

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 2009.5 Investments in both life and non-life insurance companies have grown at an average rate of 14.95% during 2009-2017, with returns increasing from 8% to 11.5% during the same period.6 The life insurance sector has a competitive landscape, with market share being closely distributed among multiple players.

The country's insurance sector, however, 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.

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. However, 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.

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 system of payment to these agents has been revoked. 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.

Various challenges underlie the limited growth of Bangladesh's insurance sector. For one, 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 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 fields are needed.

From a macroeconomic perspective, 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, 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, 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. In 2014, the National Insurance Policy was formulated through proper guidance with utmost emphasis on the discipline of the insurance companies and on ensuring people's trust. The policy has established a set of dos and don'ts, which are currently guiding the ongoing reforms in the insurance sector.

Furthermore, the IDRA has undertaken several reforms under the Capital Market Development Programme (CMDP), which is financed by the Asian Development Bank. Currently, the Bangladesh Insurance Sector Development Programme (BISDP), funded by the World Bank, is also underway, with a focus on the digital transformation of insurance services.

In an effort 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, 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.

While a culture of efficient insurance claim settlements has been developing in the country thanks to the initiatives of IDRA, many claims are still not settled on time due to long-standing mismanagement in some companies. However, IDRA has formulated a complaint cell for quick settlement of customer complaints regarding insurance claims. Customers can complain online or through letters to this cell. 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.

In order to improve the capacity, transparency, and accountability of insurance companies, listing in the stock market has been made mandatory. Additionally, the authorities have directed insurers to stop the practice of commission-based business and have set a limit on operating costs. Punitive action is being taken against those who do not comply with these rules.

In addition, IDRA has launched a Unified Messaging Platform (UMP) utilising state-of-the-art technology to establish a relationship between customers and insurers, increase accountability, provide customers with regular premium information, and create a customer database. Here, journalists can help both regulatory authorities and companies through their powerful pens.

Media and journalists can significantly promote the country's insurance business 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

Message From The Chief Guest / Fake news is a big threat in the field of Social Media Journalism
Message From The Special Guest / Journalists play an impressive role in capital market reform process
Dialogue of Bankers, Editors & Regulators / THE FINANCIAL SECTOR REFORM: The Roles of Media & Press Freedom
Is MFS really a game changer for poor?
Financial journalists should enrich their knowledge of financial matters