Insurance is not to maximise return, rather to offer protection: Chartered Life CEO

Expectations or promises for high return from insurance policies is the wrong way the country's crowded insurance industry has been walking through as it should promote the need for financial protection against various risks prominently, said SM Zialul Hoque, the chief executive officer of Chartered Life Insurance Company Ltd.   

While speaking at The Business Standard's weekly capital market show TBS Markets on Saturday, the insurance professional said big return promises tend to end up worse and a moderate return alongside the insurance protection should be considered lucrative.

In Bangladesh, 6 among a thousand people have insurance protection which is five times higher in peer economies.

The approach of seeking or offering returns from insurance instead of the protection is one of the reasons behind the extremely low insurance penetration here, while making insurance protection a must, other countries have been getting the best out of it.

His company, as the second among the 17 fourth generation life insurers in the country, has successfully accomplished its subscription process in initial public offering (IPO).

Chartered Life that embraced the business model of maximum focus on insurance protection, technology-based compliant operations and product innovation aiming its long-term success, said the CEO.

A life insurer which collects premium from many, builds a life fund and invest the money in a compliant and prudent way to generate a surplus for policyholders and shareholders should be judged by its track record of delivering what it promised, how fast it pays insurance claims and how transparent, efficient, and good governed its operations are, according to Zialul Hoque, who is a Fellow of USA-based Life Management Institute.

Before subscribing to an insurance policy, clients should examine a company well for maximum service and delivery of the promises by the insurer, he said while asked how not to end up choosing a bad insurer.  

Some life insurers in the country have been struggling to pay back its clients after policy maturities or death as their life funds shrunk amid poor financial management or lack of good governance and that made insurance even less appealing among the people.   

In the Bangladesh insurance industry too many players –35 life insurance and 46 non-life insurance companies -- are competing for the still much smaller market, while in the 140-crore people's Indian market is being served by 5 reinsurer, 5 health insurer and 42 life and non-life insurers.

Thinking beyond traditional products to reach more and more people from every walk of life should help the industry penetrate the market to a level at par with the peer economies, Ziaul Hoque believes.

Government should come up with supportive policies for faster insurance penetration across the country, he opined.

A life insurance company good for clients is also good for its shareholders ultimately as 90% of the surplus in life funds goes to the policyholders and the remaining 10% is for the investors, he said.