The government has finally accepted insurance companies' demand for excluding fire and marine insurance from the much awaited bancassurance — selling insurance products through banks.
Bancassurance is set to be launched for all types of life insurance products, while among the non-life products, motor, travel, crop and health insurance policies can be sold through banks.
The weeks-long negotiation since July between the industry and the government ended, with three-fourths of the non-life insurance business excluded from bancassurance as fire, marine cargo and marine hull insurances accounted for 74% of the non-life insurance premium in 2022.
"Let us start a good distribution channel with the products everyone is ready to accept right now and over time there will remain scope for changes," said Mohammad Jainul Bari, chairman of the Insurance Development and Regulatory Authority (IDRA).
The Ministry of Finance last month wrote to the IDRA and the Bangladesh Bank to modify their draft guidelines as per the changes agreed by the stakeholders, and the IDRA did accordingly.
The ultimate guidelines, based on which bancassurance operations would run, now await the ministry approval, said sources.
"I hope bancassurance will be launched soon," said IDRA Chairman Bari.
Welcoming bancassurance, the Bangladesh Insurance Association (BIA) President Sheikh Kabir Hossain told The Business Standard, the vast bank network — over 11 thousand branches across Bangladesh – would help insurance reach more people.
Being asked about his association's persuasion to exclude the major non-life insurance businesses, Hossain said, bancassurance is more effective for reaching to more individuals and life insurers need it most. On the other hand, non-life insurers, especially for fire and marine insurances, deal with certain businesses and the industry already has a robust network of selling agents who have been expressing their worries about an uneven competition with gigantic banks in their business as insurance agents.
There are some two thousand non-life insurance agents working with the industry.
Independent experts, however, are not happy with the exclusion of the fire and marine policies as they find bancassurance a win-win for all the stakeholders, the industry, and the economy.
For instance, Dhaka University's banking and insurance Professor Md Main Uddin finds no convincing argument behind the decision for no bancassurance in fire and marine policies.
Bancassurance is expected to increase transparency of insurance business alongside offering an efficient, more professional distribution channel, he said.
"Bancassurance should be allowed for all types of insurance policies, to raise the bar for more transparency in the industry," he said.
Echoing IDRA Chairman, Kabir Hossain said readiness of the actuators of any good plan is important and there would remain a scope for inclusion of the products which have been excluded now.
BIA Vice President Nasir Uddin Ahmed who is the vice chairman of Maghna Life Insurance Company is counting on bancassurance for the much needed insurance penetration among the mass people that includes various life insurance policies, health insurance, motor insurance, crop insurance.
Bangladeshi life insurers together earned a premium of over Tk11 thousand crore which was over Tk5.4 thousand crore for the non-life insurers, according to the IDRA.