Reforms and initiatives underway to build trust in the insurance sector

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.

Sector insiders attribute the public's lack of confidence in insurance companies to the absence of government monitoring and supervision.

Starting with the establishment of the Sadharan Bima Corporation and Jiban Bima Corporation soon after the country gained independence, the insurance sector has now grown to include a total of 81 companies, both public and private.

Mohammad Jainul Bari, chairman of the Insurance Development and Regulatory Authority (IDRA), told The Business Standard that the main reason behind the lack of trust in insurance companies has been the delays and complexities involved in settling insurance claims for customers. 

"If the sector could ensure transparency in these matters, people's confidence in it would increase," he added.

To address this issue, companies should prioritise corporate governance and work towards making insurance services simpler and more accessible through digital means, he further said.

Bari also noted that efforts are already underway to address these concerns and regain customers' confidence in the insurance sector.

Government initiatives

Prior to 2010, the government regulated the insurance sector through the Directorate of Insurance. However, in 2010, two laws were passed to develop and regulate the sector. One of these laws led to the establishment of IDRA in 2011.

And the National Insurance Policy was formulated in 2014 for the development of this sector 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.

Public awareness

Despite the insurance sector in Bangladesh being over 50 years old, the general public is still largely unaware of it.

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.

According to IDRA, instances of fraud by unscrupulous circles in the sector will be reduced if the general public is made aware of insurance.

The subject of insurance is being included in the textbooks of schools and colleges. It has already been included in higher education and thus is creating skilled and educated manpower in the sector.

Settlement of insurance claims

According to an IDRA report, the settlement of insurance claims is the key component to satisfy customers, but it has been overlooked by the insurers.

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.

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.

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.

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.

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. 

Additionally, steps have been taken to prevent policy lapses in the case of life insurance policies. Furthermore, agents are being trained to improve their skills.

Sheikh Kabir Hossain, president of the Bangladesh Insurance Association and chairman of Sonar Bangla Insurance Limited, told TBS, "There has been negative publicity against the sector for irregularities in some companies. But the companies that are doing business in compliance with the law are doing well by retaining customers' trust."