Despite being home to too many companies, Bangladesh is a country at the bottom in the list of insurance penetration, be it in life insurance or non life insurance.
Innovative ways and incremental use of technologies to reach and serve as many people as possible is the key to removing existing roadblocks, believes Farzanah Chowdhury, Managing Director and Chief Executive Officer of the country's leading non-life insurer Green Delta Insurance Ltd.
The Chartered Insurer from Chartered Insurance Institute (CII) of the United Kingdom recently talked to The Business Standard in an exclusive interview ahead of National Insurance Day.
Historically a negative demand product
Here in Bangladesh, insurance policy is still a product with negative demand. Few potential customers are interested in paying a premium to be under insurance coverage, no matter how much it can improve their lives.
Most individuals and businesses here think of an insurance policy only when they are forced or in some cases heavily pushed to take the services.
Too much of a push from insurance policy sellers is also responsible for creating negative demand for insurance, especially in the life insurance sector, like many other insurance experts.
Besides, customers' previous experiences are also blamed for the situation. In earlier periods, in the insurance industry there had been evidence of irregularities in premium collection and claims settlement.
But the situation in the industry has changed in recent years as the empowered Insurance Development and Regulatory Authority (IDRA) has been working closely with it to formulate policies, regulate business practices, and facilitate the desired insurance penetration for economic development, said Farzana.
Now insurers are more transparent and accountable about their agents, premium transactions and of course claim settlements.
Manpower and skills
The insurance industry has long lagged behind in terms of attracting talents, training and educating industry professionals compared to other sectors in financial services.
Farzana is seeing some light there too, as Bangladesh Insurance Academy is serving professionals. University faculties are also playing roles to produce human resources for her industry.
Very importantly from the industry there are some efforts to fill the gaps. Green Delta's subsidiary Professional Advancement Bangladesh Limited (PABL) is the leading one there.
"I had to fly to the UK to take the CII exams. I, alongside a very few industry professionals, know how tough it is for a young Bangladeshi executive," said Farzana, who also attended an MBA Program at Australia with full scholarship before pursuing CII.
PABL is working as a learning and exam centre for CII programs in Bangladesh, which is helping aspiring insurance professionals to excel.
"You have to have the opportunity to grow at your early ages in your career. We are making it easy both through our PABL programs and within teams of Green Delta," said the CEO of the market leader in non-life insurance services in Bangladesh.
She is proud to see many of her former colleagues in top management positions across the industry.
Low penetration problem
There is no doubt that it is the insurers' job to reach out to people and businesses effectively with their products and services and have them opted in.
On the other hand, "as public limited companies insurers are also responsible to ensure profitability to provide justice to their shareholders," said Farzanah.
Innovation is the key
In Bangladesh, non-life products like crop insurance and cattle insurance have been very essential in reassuring farmers.
But why so late? And why only Green Delta is found in those arenas?
To handle too many small policies in rural areas, unban-centred insurers have to spend a lot and unfortunately not too many companies see business viability in non-traditional policies.
Green Delta, from the very beginning, looks for impact of their business activities and the good thing is that International Finance Corporation (IFC), a World Bank concern, recently came in as equity partner.
"We are trying to tie up, collaborate with all the groups who have agenda to improve the life of people -- the government, nongovernmental organisations, innovative banks, international agencies, development partners.
Joining programs, campaigns, working as channel partners they are helping Green Delta to offer essential innovative products."
Adoption of technology
"We do not have to go to crop fields physically to check if crops are damaged or not. It is rather the central meteorological database that is telling us how much damage took place and how much the claim should be," said Farzana.
Through channel partners her company is automatically settling the claims and none of their officers are going there. Thus the cost for non traditional small ticket policies is minimised.
Cattle insurance is a viable insurance product now, because Green Delta is tracking each insured cattle through devices connected to the satellite.
"We are reaching out to mass people through technology in a cost effective solution and that is going to be the driver of insurance penetration in coming days," said Farzana.