Insurance industry is still running with traditional methods and practices, in fact, the industry has no such innovation and product diversification, and whatever exits, has no publicity at all, said Md. Hemayet Ullah, Chief Executive Officer (CEO) of Fareast Islami Life Insurance Company Limited in an exclusive interview with Bangladesh.
"But I believe that the present administration of IDRA is worthy enough to render the due focus in the society on insurance industry and thus I am hopeful that the industry will see a boost certainly if it retains longer time, the way it is moving now", he added.
Hemayet Ullah mentioned that after coming of the Insurance Act and IDRA into being, other regulatory agencies paid attention to this sector. Mr. Shafiqur Rahman Patwary, the current Chairman of IDRA, was an expert banker as he was the senior Secretary of the Banking & Financial Institutions Division of the Ministry of Finance, his main contribution is that he has compelled the companies to settle the claims timely.
Hemayet Ullah replied a set of queries that featured the present scenario of country's insurance industry, its problems and prospects.
Excerpts of his interview is produced here for the valued readers of Bangladesh Post
Bangladesh Post: Would you please shed light on the product diversification in insurance industry of the country, mentioning the latest focus in the insurance business?
Hemayet Ullah: If we have a look at the industry we can see that before liberation, there were a few insurance companies but after liberation many of them have been brought under merger. Then some sorts of negligence was generated among people regarding the insurance industry, maybe due to service quality or merge-up or anything else. Merge-up had created some problems like documents were not preserved properly, again after dividation, the service to customers were not done properly, since then till to a certain level of time people cherished the negligence about insurance. Then when private sector insurance came into market they tried their best to provide services to the clients. Then the companies like national Life, Delta Life, who came first also had to face hurdle because of people’s reluctance. Now there are 32 companies in Life sector, First generation, 2nd generation and 3rd generation companies and they tried hard to regain the trust of the people in the field. They used to make commitments to the clients but they did not follow the legal procedures, as a result what happened? The companies had to manage their clients according to their own way. Then there was no regulatory authority. We must thank the government because they have framed an Insurance Law in the year 2010, and has also established the Insurance Development and Regulatory Authority (IDRA), so effort is on to make the companies compliant. The companies had to face trouble when they had to settle the claim because they didn’t have sufficient money in the fund. Because they used to spend the fund carelessly as there was no legal framework to control them. After coming of the Insurance Act and IDRA into being, other regulatory agencies paid attention to this sector. In second phase the management in IDRA has come from the bureaucrats of the government, naturally bureaucrats become efficient in administrative works. Mr. Shafiqur Rahman Patwary, the current Chairman of IDRA, was an expert banker as he was the senior Secretary of the Banking Financial Institutions Division of the Ministry of Finance, his main contribution is that he has compelled the companies to settle the claims timely. There is a tribunal and if there are any allegations of not settling claim, the hearing takes place and instant verdict is given from the tribunal. It is good to know that so far at least 300 to 400 files have been settled through this tribunal. What usually a client wants is his money back after end of the term of his policy. But there have been practice in the field that insurance is not settled largely, specially there have been 4 to 5 companies who are known as not paying the insurance claim. But over the years, the situation is now a-bit changed due to the presence of IDRA and now the awareness and culture has been created to obey the law. Bar on commission has been imposed in general insurance sector. And it was done with the consensus of MDs, Chairmen of the companies altogether. They have been determined that there will be no compromise about the commission.
Bangladesh Post: How would you evaluate the crisis of trust of clients about the companies?
Hemayet Ullah: A total of 9 latest generation companies have emerged in the country, actually, they are fighting for survival because when they came into the market a negative impression regarding claim payment existed in the industry, again the field workers of the companies are not feeling easy to move into the market because they were not paying the maturity claims. If these filed workers move to new companies the same thing will happen so what is happening is they decide to change location for his field work. But wherever they go, they have to face hurdle because of people's negative impression on industry. The new companies are facing this hurdle as a result what is happening? The number of lapsed policies is increasing day by day. So it is needed to come out from this fear and panic of customers about the insurance policy. Now raising awareness among people is a solution, government is trying to display messages through bill-board but it is not sufficient. Government can run regular publicity through Television media. Government also has to ensure to pay back the reserve money of clients. Now, a fear has been created among the insurance owners that there is no way other than paying claim. But government has to ensure the protection of reserve of customers with Bangladesh Bank.
Bangladesh Post: Why are you making the government responsible for doing these? Is it not possible for you the owners and company management to do these things?
Hemayet Ullah: I said that the authority has to establish the rules of the government. You know there have been rules but these are not being implemented strictly. I must pay thanks to the government. Finance Minister has spent a long four hours recently in meeting at NEC to discuss over the insurance issues, it is for the first time ever and really great. What does it mean? Now government is looking into the issues of insurance seriously because if the government made a declaration that the people, holding NID cards must deposit Tk 10 each for insurance every month, then Tk 160 crore fund could be developed a month. It can be done weekly, fortnightly or monthly, those who are able to earn they can pay for insurance, households may come under insurance, then what will happen? A database will be created, financial strength or mobilization will be created. I believe that the people are now running IDRA are competent and these type of people are very much needed to run bodies like IDRA. I believe that the present administration of IDRA is very much competent to render the due focus in the society on insurance industry and thus I am hopeful that the industry will see a boost certainly if it retains the way it is moving now. But it will not be possible by the private sector entrepreneurs in the industry.
Bangladesh Post: What about the research, innovation or product diversification in the insurance industry?
Hemayet Ullah: You know presently there are a total of only 3 actuaries in Bangladesh and only one of them is active, so what can be done my a single man? He has to remain engaged round the year by doing assessment, then when can he do research? Now the industry is running with traditional practices and methods.
In fact, the industry has no such innovation and product diversification, and whatever exits has no publicity. You know a health insurance program has been introduced by Farzana Chowdhury of Green Delta Insurance, which is also falling aside at Tangail. If there were a number of Actuaries, they could give us diversified products and innovative ideas. The fear exists in the society about insurance, we should work first to overcome this. But what I feel is that it will take more than 10 years to get a radical change in the industry as the government has given due attention to the industry.