Ala Ahmad, FCA, chief executive officer, MetLife Bangladesh, tells The Business Standard's Titu Datta Gupta how the country's insurance sector is evolving and why insurance through banks needs to be introduced.
How is the insurance industry responding to the Covid-19 pandemic crisis?
If you compare insurance with sectors such as telecoms and banking, the industry is relatively behind where it should have been in areas like governance, automation and innovation. Not in Bangladesh alone, it is a global phenomenon. Covid-19 has pushed the industry into an even bigger challenge. Insurance agents have to see customers in person. Pandemic and lockdowns forced us to limit such visits. Besides, uncertainty about small businesses or jobs, as exposed in the pandemic, has made potential clients more hesitant about long-term insurance policies. We are facing delays in premium payments primarily for drops in clients' income and also for disruptions by lockdown and movement restrictions.
Having said these adversities, I should say that any such challenge creates some opportunities too. We now see that people at least listen to what we say. It is because of the huge financial burden if a member of a family gets Covid-19 infected and needs to be hospitalised. The pandemic also instilled a sense of fear about future uncertainties. These factors have impacted people's attitude towards insurance which is favourable for our industry. We are now seriously working on digitisation. We are providing our staff with the necessary tools to facilitate video chats and online applications to avoid face-to-face client visits. Steps towards automation, which would otherwise have taken three to five years, are now being taken in a month or two. The situation has forced us to move faster. It is a wake-up call for the insurance industry.
Why has health insurance been neglected so far in our country?
The challenge we face in most cases is people's tendency to take insurance policy as a savings instrument – depositing money to get a good return in the future. They are less aware of the fact that health insurance policy premiums are a protection for the future. Though health services costs are rising, people are yet to give health insurance a priority.
However, people's affordability has risen now compared to 10 years back. There are a growing number of people who now can look beyond the present needs and think about the future health of the family apart from housing and other things. But still, we have to sell health insurance with a savings product. As a life insurer, we provide our clients with health coverage as a supplementary benefit to usual insurance products.
Has Covid-19 been included in the health insurance coverage in Bangladesh?
Covid-19 is also covered by our health insurance products. Usually, some diseases listed under "critical illness" are covered by health insurance. In addition, hospitalisation for other reasons or emergency surgery is also ensured automatically.
You are sponsoring a fellowship in actuary. Do you foresee better growth in the insurance sector requiring more skills in the near future?
Developing human resources in the insurance sector is long overdue. The industry needs expertise even at present. Life insurance penetration in Bangladesh is as low as 0.5%, well behind the average of 3.3% of the emerging markets. Given the country's overall economic growth, it is a matter of time when we will see the penetration reach 2% to 4%.
The government has attached proper attention as reflected in the insurance policy. People are getting more aware. What we need now is more effort for financial modelling, financial planning, evaluation, product pricing, for which we will require more skills. Ultimately, universities have to come forward to build human resources. If demand is created in the market, they will open new departments and students will get enrolled.
As an industry, we also do have some responsibility. That is why we have decided to support 10 selected students for the actuary course. We will bear the expenses for their fellowship course under designated actuary institutes of the USA or the UK. We invited applications from university students and got a good response. There are only six or seven fellow actuaries in the country at present, and three of them are working with MetLife Bangladesh.
What prospects do you see for the insurance industry?
I am very hopeful about the future of the insurance industry in Bangladesh. Its progress walks hand in hand with overall economic growth, when people earn more and have disposable incomes to think about future protection. We are proceeding toward a middle-income country; our per capita income is rising well. We hope people will now be more inclined to buy insurance policies.
Another prospect is from the demographic dividend we are having now with huge youth resources who are entering the job market every year. These youths will earn, and they will buy insurance products. Thus our market will go bigger, our capacity will go up.
Besides, the government has attached special attention to this sector. In the financial sector, there are two national days – one is National Tax Day and the other is National Insurance Day. It testifies the importance given by the government to the insurance sector.
At this moment, promoting insurance through banks is a hot topic for us. Both the regulators – the Bangladesh Bank and the Insurance Development and Regulatory Authority – are working closely to devise the way how insurance services can reach a wider population through the banking system. If it happens, then bank branches will be our sales points. Now we only depend on agents. If banks are engaged, we will be able to reach more people through bank branches all over the country.
There is some sort of public mistrust about insurance.
People may have some concerns about the settlement of insurance claims. If claims are settled faster, the level of public trust goes up. In our company, we have simplified the claim settlement process. We have run a special programme. If any of our clients die of Covid-19, we approve the claim in three hours of having been informed by email by the beneficiary. The claim is delivered straight to the beneficiary's bank account in three working days.
We have taken it as a bold commitment. From mid-April to date (16 July), we have settled more than 122 claims worth over Tk5 crore in three months. In cases other than Covid-19, we do not take more than a week to process a claim.
There are two common problems that the industry needs to overcome. One is, as I said earlier, people confuse insurance products as savings instruments and get less interested when they count interest profit. The insurance sector has the scope to work in this area to change people's perceptions.
Discontinuation of long-term insurance products is another common problem in the industry. People buy policies for 10 or 15 years, but many of them discontinue those after one or two years. As an industry, it is our responsibility to make people easily understand the need and value of insurance products right at the moment we sell those.
MetLife, formerly Alico, has been in operation here for nearly seven decades. What is your strength in this market?
We have been in Bangladesh for over 67 years. A presence so long gives us a privilege to understand the pulse of this market better than others.
Though a foreign company, we are very much local. It was 1984 when MetLife Bangladesh had its last foreign chief executive. Our asset base now stands at over $2 billion. It is a huge portfolio. A large part of our investment has been put into the government's treasury bonds. It means our investment is being used in public expenditure.
MetLife is one of the largest taxpayers. For the last few years, we have been receiving citations from the National Board of Revenue.
Yet, what touches my feelings the most is our employment generation. As many as 19,300 insurance agents are working with us in this company right now. At a time when people are losing jobs due to the pandemic, we added about 2,000 to our manpower in the last year.