Insurance growth hit a three-year low in 2024

Infographic: TBS

By the end of 2024, the insurance sector's premium collection growth dropped to a three-year low of 7.3%, down from 9.1% in 2023. The decline is attributed to the sector's struggle to gain client trust amid persistent economic uncertainty.

According to the Insurance Development and Regulatory Authority (IDRA), the total premium collection in the insurance sector stood at Tk18,768 crore in 2024, up from Tk17,484 crore in 2023.

In the life insurance segment, premium collection slightly decreased. Life insurers collected Tk12,266 crore in 2024, compared to Tk12,273 crore in the previous year.

On the other hand, the non-life insurance segment saw growth. Premium collection rose to Tk6,502 crore in 2024, up from Tk5,953 crore in 2023.

Industry insiders say that the business environment remained challenging last year. Due to the dollar crisis, many companies could not open Letters of Credit (LCs), except for essential goods.

The non-life insurance sector is largely dependent on the banking sector, which itself was in a difficult situation last year. As a result, premium collection in the non-life insurance segment was negatively affected.

On the other hand, life insurance companies also struggled to collect premiums due to the unfavourable situation. Attracting new clients was a challenge for many, and some existing clients even failed to pay their premiums during the tough times.

Some companies, however, did well amidst all the uncertainties.

In 2024, MetLife Bangladesh achieved a premium collection of Tk3,300 crore — the highest among all life insurance companies in the country for the year.

Ala Ahmad, chief executive officer of MetLife Bangladesh, told The Business Standard that, like many other sectors, the insurance industry in Bangladesh is also feeling the effects of broader economic pressures.

He noted that while overall growth has slowed, it's important to highlight that a large portion of the Bangladeshi population remains outside the insurance net. Despite this, the steady rise in premium collection, even at a slower rate, reflects increasing awareness and interest in financial protection, he added.

"MetLife's premium collection exceeding Tk3,300 crore is a testament to strong customer trust. We have consistently invested in digital technology to make premium payments easier and more accessible. Currently, over 70% of our premiums are paid digitally," Ala Ahmad said.

National Life Insurance Company collected a premium of Tk2,102 crore in 2024, which is 13% higher than Tk1,860 crore in 2023.

Md Kazim Uddin, chief executive officer of National Life Insurance Company, told the Business standard that the biggest challenge in the life insurance sector is the lack of trust among clients. Companies that have been able to overcome this challenge are performing well. When claims are not settled on time, it creates a trust deficit that quickly spreads to other policyholders.

He stated that National Life is fully committed to settling client claims. Even during the Covid-19 pandemic, the company remained active in fulfilling its claims obligations. Identifying and resolving clients' issues at the grassroots level was one of their key strategic priorities.

"Whenever we managed to settle a claim on time, we gained multiple new clients as a result. This has made premium collection easier for us, even during difficult times," he added.

Khawja Manzer Nadeem, Managing Director of United Insurance, said the non-life insurance sector could not perform well last year due to the dollar crisis and a significant decline in LC (Letter of Credit) openings across the country.

He noted that at one point during the year, when the country was experiencing political unrest, the marine insurance business dropped around 30%. However, he added that if the situation had remained stable, there would have been good opportunities for growth in the non-life insurance sector.

Md Solaiman, deputy director and spokesperson of IDRA, told TBS that the regulator has verified the issues and formally requested action plans from the six companies that have failed to adequately pay policyholders. He said many of these insurers have long-overdue matured policies that remain unsettled.

In response, IDRA has instructed the companies to submit a three-month claim settlement plan outlining how they intend to address their outstanding liabilities. "If they fail to implement these plans, IDRA will take stricter action to ensure policyholders receive their rightful payments," Solaiman warned.

The six companies are: Fareast Islami Life Insurance, Baira Life Insurance, Golden Life Insurance, Sunlife Insurance, Sunflower Life Insurance, and Padma Islami Life Insurance.

IDRA has asked each of them to provide a detailed plan specifying how much they can pay within the three months and to disclose whether they are facing any financial constraints that hinder timely payments.

"One of the main reasons cited by companies for non-settlement is that Sadharan Bima Corporation (SBC), the state-owned reinsurer, fails to settle their share of claims on time. As a result, insurers are unable to clear a significant portion of claims themselves," Md Solaiman said.

"IDRA has already informed SBC about the issue. The new leadership at SBC is now working to reduce this gap," he added.

Although life insurance companies have been collecting premiums at a steady rate, several of them, particularly six companies identified by IDRA, have failed to settle policyholder claims on time.

In 2024, life insurers failed to settle around 34% of the claims, leaving outstanding claims worth approximately Tk4,374 crore by the end of 2024.

Insurance companies in the non-life sector are failing to settle around 68% of the claims, resulting in outstanding claims amounting to approximately TK2,635 crore by the end of 2024. As a result, many policyholders are suffering, unable to receive their rightful compensation.