Bancassurance set to be launched in Bangladesh by 1 March
The finance ministry on 3 December wrote to Bangladesh Bank and the IDRA to take necessary measures to launch bancassurance soon.
Bancassurance, the selling of insurance products through bank branches, is set to be launched in Bangladesh by 1 March, National Insurance Day.
"The Ministry of Finance recently approved the modified directive, and we will publish it next week," Insurance Development and Regulatory Authority (IDRA) Chairman Mohammad Jainul Bari told The Business Standard.
Insurance companies and banks which would actuate the plan for the new insurance selling channel, might need 30-45 days to prepare themselves, said the chief of the country's insurance regulator.
"We expect bancassurance will be launched by the next National Insurance Day," he added.
Keep updated, follow The Business Standard's Google news channel
Bangladesh, extremely lagging behind in terms of insurance penetration, also lagged in adopting the insurance product distribution channel popular in other countries.
After a decade of talks, the regulator, the government and the industry together finalised the framework for bancassurance in the middle of this year.
Three major non-life insurance businesses — marine hull, marine cargo and fire insurance that account for over 80% of the non-life insurance premium — were excluded from bancassurance as the Bangladesh Insurance Association (BIA) argued that they are not ready yet for the inclusion.
Reaching a consensus, the government in October asked the Bangladesh Bank and the IDRA to modify their directives for bancassurance and the modified ones have been approved by the finance ministry recently.
The finance ministry on 3 December wrote to Bangladesh Bank and the IDRA to take necessary measures to launch bancassurance soon.
Bancassurance played a great role in increasing insurance penetration in many countries, including neighbouring India and Bangladesh should not be an exception, expected BIA Vice President Nasir Uddin Ahmed.
According to the draft directives for bancassurance, an insurer can have up to three banks as its corporate selling agents while a bank, too, can be the agent of up to three insurance companies.
Banks can earn the agent commission not more than the percentage allowed in insurance regulations.
There are over 11,200 bank branches across Bangladesh and they can play a vital role in increasing the popularity of insurance in the county, said Nasir Uddin Ahmed.
