Considering the present situation of non-life insurance industry in Bangladesh, some rules and regulations should be reviewed for the greater interest of this sector. At present the non-life insurance sector of Bangladesh is not successfully contributing to the country’s remarkable growth. Therefore, if this trend continues it will have a negative impact on non-life insurance sector in coming days.
There are some limitations that hinder the development of non-life insurance like giving of additional pay back over the prescribed commission while our insurance premium rate is too high comparing to overseas market.
Besides, considering non-life insurance sector, basically agents for procurement of business are not needed and it should be withdrawn and spend these expenses for recruitment of marketing executives for procurement of business.
On the other hand, there are limitations of non-life insurance product. So, if we want to expand this (non-life insurance) sector, there is vast opportunity to find out the logical insurance market and those markets should be made mandatory.
For extending the scope of insurance market it shall be required to review some rules and regulations of non-life insurance sector. Keeping these limitations in mind, if all concerned take effective measures to this end, non-life insurance sector will surely contribute to the country’s economic growth.
In case of government business, the state-run Sadharan Bima Corporation shall underwrite 100% of that business. About 50 percent government business is presently distributed among the non-government non-life insurance companies at an equal rate should be withdrawn for betterment of the non-life insurance sector.
Apart from these, in order to maintain discipline and ensure transparency in non-life insurance market, it should be considered that the non-tariff market in Bangladesh. This will expedite increase in total insurance premium of non-life insurance sector.
In respect of the present law of re-insurance, 50% of re-insurance business should be ceded to Sadharan Bima Corporation.
And it should be changed to 30% mandatory to Sadharan Bima Corporation while remaining 70% will have to be allowed in the Overseas Market.
However, in case of 70% re-insurance, there shall be option for non-life insurance companies to re-insure with Sadharan Bima Corporation or with foreign re-insurer.
In case of introducing new non-life insurance product, the original insurance company be allowed to market first under intimation to the insurance authority and if it is successful then going to take proper approval from the insurance authority. Here trail period should be prescribed.
Actually grading of non-life insurance companies’ performance should be based on the ability of prompt settlement of claims. This requires some changes regarding submission of claim information, papers and documents. That is needed to make faster settlement of claims easier.
Present law states that the collection of premium should be deposited into company’s account on date or on the following day. In this respect it should be considered one month for depositing premium into company’s account instead of on date or following day.
Besides, if an insurance company fails to deposit Premium into company’s account within one month then insurance development and regulatory authority (IDRA) may impose per day penalty at a considerable rate for delay.
Therefore, if the authorities concerned and other stakeholders come forward, it is possible to make non-life insurance sector healthier. This will enhance the confidence of the insured, grow their interest for taking proper insurance coverage for their own interest, as well as the growth of non-life insurance sector will tremendously improve and non-life insurance premium volume will also be remarkably increased, that will play a great role in national economy.
Ahmed Saifuddin Chowdhury, the writer is the Chief Executive Officer, Bangladesh General
Insurance Co. Ltd