80% of Bangladeshis worry about sudden health expenses: Survey

Unforeseen health costs are the top concern for over 80% of Bangladeshis, followed by education and retirement finances, according to a survey.

Despite this apprehension, the majority are not availing themselves of insurance benefits, as highlighted in a study titled "Unlocking the Future of Life Insurance in Bangladesh: Insights, Challenges, and Strategies," jointly conducted by North South University and MetLife Bangladesh.

The survey report underscores that people tend to prioritise bank deposits, bonds, and other investments over insurance to address their financial worries.

Drawing feedback from more than 1,280 participants across major cities in Bangladesh, the research explores perceptions and attitudes towards insurance, customer challenges, and potential pathways to bolster insurance penetration in one of the world's most underinsured markets.

According to the survey, prevalent financial concerns among Bangladeshi customers encompass current health emergencies, children's education, post-retirement finances, asset acquisition, travel and leisure, and cost-cutting measures.

19 life insurance companies paid claims around 80-90% while 10 companies paid 70% of claims. The rest of the companies could not pay claims properly due to a lack of governance. Mohammad Jainul Bari, Chairman, Insurance Development and Regulatory Authority (Idra)

Moreover, a report by the Health Economics Unit of the health ministry indicates that Bangladeshis are bearing over two-thirds of their treatment costs from their own pockets.

The share of out-of-pocket health expenditures in the country surged from 56% in 1997 to approximately 69% in 2020. That year, the government's average per capita expenditure on healthcare stood at Tk4,578, or $54, it adds.

For these, they prioritise savings, investments, and insurance. Of these, 53.06% of people have DPS, 39.80% invest in properties, 31.96% in bonds, 31.81% in FDR, 22.89% in insurance, and 15.83% in others.

According to the survey, subjective norms or social opinions act as the main driving force in insurance. The opinions of friends and family play a very important role in buying insurance. It also affects confidence in the insurance sector.

A person's perception based on the acceptance of the opinion of close people in doing something about something is called a subjective norm. This means that if the surrounding people or society have a positive perception of insurance, the probability of accepting the financial protection of insurance increases significantly.

Moreover, the study also highlighted the dependence on bank savings to meet financial needs. Besides, citizens of this country feel comfortable investing in property and bonds and making fixed deposits. The main reason for opting to save for future financial needs is liquidity.  

According to the participants, the main reasons for not taking up insurance services are reluctance to commit financially in the long term, a lack of required people, unsatisfactory service from agents, and the complexity of the claim settlement process.

Increasing awareness of insurance benefits, digitising insurance services, providing value-added services, expanding distribution channels, and strengthening the governance of the insurance sector can help tap customers.

At the programme, Mohammad Jainul Bari, chairman of the Insurance Development and Regulatory Authority (Idra), said people are making insurance every year, but they can't continue properly because of misleading information from agents.

He said insurance companies made 15 to 17 lakh policies in 2022, but only 78,000 policies continue. So, insurance companies need to deploy skilled agents, especially in rural areas, he added.

He further said 19 life insurance companies paid around 80-90% of claims while 10 companies paid 70% of claims. The rest of the companies could not pay claims properly due to a lack of governance.

"We have a huge insurance protection gap – around 700% – with GDP," he added.

Commenting on the research, MetLife Bangladesh's Chief Executive Officer Ala Ahmad, said, "With the growth of Bangladesh's insurance sector, the key beneficiaries will be the people of the country, as they will be able to enjoy a confident future.

"The research identifies immense potential for insurance, and we are delighted to support this research as it opens another avenue for all stakeholders to work together to strengthen Bangladesh's insurance sector."

Amal Krishna Mandal, additional secretary (Insurance and Capital Market) at the Financial Institutions Division, and Prof Helal Ahammad, dean of the School of Business (North South University), also spoke at the event.