Express (August 27, 2011)
Bangladesh needs to set up new life insurance companies, considering its large population size, the insurance regulator said in a report.
The Insurance Development and Regulatory Authority (IDRA) prepared the report at the instruction of the finance ministry.
Earlier in June, the ministry of finance (MoF) asked the IDRA to prepare a detailed study on the country's life and non-life insurance companies to issue new licences.
The insurance regulator in its report suggested for a merger of a number of weak general insurance companies as they have been struggling to survive for long.
IDRA sources said it has over 400 applications, seeking licences for floating new insurance companies, with three to four applications being submitted every day.
They also said the applicants include many from the ruling party leaders and their relatives.
However, the IDRA is planning to submit its report to the MoF within the first week of September.
M Shefaque Ahmed, the country's lone full-fledged actuary and chairman of IDRA, was the head of the committee that prepared the report. Four other members of IDRA assisted him to do that.
When contacted, the IDRA chairman declined to comment on the issue but said: "We will give you (journalists) copies of the report after formally submitting it to the government."
The mad rush for licences started after the finance minister announced in late June that new banking and insurance companies would be allowed in the market.
The Awami League-led government in its previous regime (1996-2001) also issued more than a dozen of licences to new insurers, with three given on the last day of its earlier tenure.
Sheikh Kabir Hossain, chairman of Bangladesh Insurance Association (BIA), recently told the FE that the government might issue licences to four or five life insurance companies.
He also said there is no need for giving any fresh licence to any new non-life insurance companies.
Mr Kabir said there is immense potential of life insurers in the rural areas.
"The life insurance companies might bring new products including health insurance which is very popular in other developing nations," he added.
There are 62 insurance companies operating in the country. Of them, 43 are general insurers and 17 life insurers. The remaining two -- one life and another non-life -- are owned by the government.
The total premiums earned by life insurers were nearly Tk 50 billion in 2009, up by 28 per cent from 2008.
Non-life insurance companies' premiums grew by 13.71 per cent to Tk 13.90 billion in 2009.
The government passed two insurance laws in March last year to help strengthen the regulatory framework and make the industry operationally vibrant.
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