Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Tuesday, April 25, 2017 12:55:33 AM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Current Scenario of the Insurance Industry

By
20th-Nov-2016       Readers ( 595 )   0 Comments
Comments
Share your thought
Post a comment »
Read all (0) »

Farzana Chowdhury
MD and CEO of GDIC :
Farzana Chowdhury ACII (UK) and Chartered Insurer, Managing Director and CEO of Green Delta Insurance Company Ltd. (GDIC) is seen as a trailblazer in the insurance sector of Bangladesh. Through her dynamic leadership, she has guided her team at GDIC to scale new heights. Our Reporter Kamruzzaman Bablu recently caught up with her to discuss on some of the most talked about issues on the insurance sector.
NN: What is the current scenario of Insurance Bangladesh?
Farzana : The insurance sector in Bangladesh is still relatively untapped with less than 1 percent penetration. The sector contributes less than 1 percent of the GDP. This means there is immense growth potential for the sector. The Industry has been growing consistently over the past decade. Recent trends show that now people are more aware on insurance and informed on the importance of having various insurance coverage.
NN : It has recently been said that the insurance companies are spending more than the allowable amount as management expenses. What is your take on it?
Farzana : Yes it is true that the companies have been spending more than the allocated amount mentioned in the 1958 Insurance Act. Even our expenses have been on the higher side. But what we have to consider is that the amount mentioned in the Act 58 years ago do not give a proper guideline as the circumstances has changed over the past six decades and based on these, the Insurance Act 1958 should be amended.
NN: Why do you think the management expenses are higher?
Farzana : As I have mentioned earlier, the prevailing market conditions have seen drastic changes since 1958 resulting in an increase in the amount spending by the insurance companies. Some of the major reasons are:
Inflation has increased significantly since 1958. As a result of this all the utilities expenses, various costs like advertisement, transportation, and salary have also seen significant increase. For some of these areas, the expenses have increased up to 3000 times compared to 1958. Even the insurance registration fee in 2005 has been increased by 133 percent by the regulatory body.
The government in 1991 has imposed Value Added Tax (VAT) on almost all the expenses. This VAT was added to our expense. It may be noted that when the Act was imposed in 1958, there was no provision of VAT in it. If we did not have to pay VAT, then we would have been able to stay within the prescribed limit.
Even though the costs have soared, the Central Rating Committee (CRC) has reduced the premium rate for various industries. This was added to the insurance companies as a burden.
There are 45 non-life insurance companies competing in the market and the competition is very stiff since the size of the market is so small. In order to sustain in the competition, the companies have to spend a considerable amount in acquiring and retaining the skilled work force.
We, at Green Delta have always been emphasizing on skilled insurance professionals. For this reason we continuously send our employees to various training programs in both home and abroad. Even though this has increased our expenses, but we have been able to create a pool of qualified and skilled professionals.
Besides, the all the companies are taking numerous initiatives to raise insurance awareness among the general public. This has significantly increased the expenses of the individual companies.
NN : Can you give some points justifying this increase in expenditure?
Farzana : Look, it has been said that the higher expenses adversely impact on a company's ability to pay the shareholders' dividend and claims to the clients.
Green Delta, since its inception has been able to give significant amount of dividends to its shareholders. On an average we have paid 37 percent dividend in the last 20 years. This was possible for the proper management and expense control by the management. We expect the trend to continue in the coming days.
Green Delta has always been known for its prompt claim settlement. Our clients are satisfied for our claims settlement procedures and we have been appraised from different quarters for our reputation. We have settled few of the largest claims in the insurance sector of Bangladesh.
Despite paying significant dividends to the shareholders, settling claims of our valued customers and paying the government all the relevant taxes, our total assets have been increasing. This illustrates the financial strength of the company.
We, being the industry leader are in a strong position in terms of all the financial indicators e.g. Earnings Per Share (EPS), P/E Ratio, Book Value Per Share, Market Value Per Share etc.
Our available solvency margin is a lot higher than the required solvency margin. This confirms our ability to pay for the insurance claims for our valued customers.
GDIC has the top credit rating among all the insurance companies in the country. We are the only insurance company in Bangladesh to have been awarded the AAA credit ratings for two consecutive years.
Our company is audited every year by the top audit farms in the country.
In light of the aforementioned, even though our expenses were higher than the 1958 guideline, but we have been able to fulfil all the commitments of our valued stakeholders. This reiterates our financial strength and good governance,
NN : What role do you think the regulator (IDRA) can play to address this issue?
Farzana : Insurance Development and Regulatory Authority (IDRA) has done a tremendous job in bringing transparency to the insurance industry in Bangladesh. In spite of having so much limitations, they are relentlessly trying to ensure good practices by the company.
We think, now is a high time, they do something about the Insurance Act 1958. As already discussed earlier, all the relevant factors have changed so much over the past 58 years, the guideline on management expenses make little sense in present. In addition, the management expenses of insurance companies are much lower compared with that of the banks, which are also financial institutions. Moreover, the ceiling of management expenses for the insurance companies should be based on solvency margin of the respective companies as we believe it is unfair for leading companies to have the same ceiling compared with the smaller ones.  
So, we, on behalf of the entire industry, humbly request IDRA to look into it and bring the necessary changes. The insurance sector will be benefited from it and the reputation of our industry will also be enhanced.

0 Comments. Share your thoughts also.
Write a comment
Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Big steps needed to end city water logging


AFTER torrential rain, most parts of metropolis Dhaka, Chittagong and other major cities are suffering from knee-deep water from early this week. Accompanied by story wind and smog city life has become unbearable at places in muddy streets along the dirty footpaths. Under-construction flyovers are blocking movement of traffic in ...

Cricket »

Kohli pain after Bangalore set new low in IPL


AFP, New Delhi :Skipper Virat Kohli said "it really hurts" after Royal Challengers Bangalore slumped to a record low score of 49 against Kolkata Knight Riders in the Indian Premier League.Chasing a modest 132, the Bangalore batsmen -- including Kohli, Chris Gayle and AB de Villiers -- crashed in just ...

City »

Member of the Executive Council of Dhaka Club Limited Abdus Selim handing over a cheque of Tk 24 lakh to BGMEA President Siddiqur Rahman for the assistance of Rana Plaza victims at a ceremony held in the city on Sunday.


.

Entertainment »

Purnima in three new plays


Entertainment Report :It is little bit late to come Eid but the directors have already started to make Eid telefilms and plays. Three directors are going to make three plays to cast National Film Award winner actress Purnima. These three directors are: Chayanika Chowdhury, Sraboni Ferdous and Rajibul Islam Rajib. ...

International »

Trump`s approval rating hits record low


AP, Washington Post :Six days before marking his first 100 days in office, President Trump has the lowest approval rating of any president in more than 70 years, a pair of polls published Sunday found.According to a new ABC News/Washington Post poll, just 42 percent of Americans approve of Trump's ...

Cricket »

Mustafizur returns home tomorrow


Sports Reporter :'Wonder Boy' Mustafizur Rahman will return home tomorrow from tomorrow. Mustafizur Rahman had a sorrow start in Indian Premier League (IPL) 2017. The 'Cutter Master' played for Sunrisers Hyderabad against Mumbai Indians in Mumbai in his first match on April 13. Mustafiz bowled 2.4 overs conceding 34 runs ...

Football »

Neymar ban dispute rages ahead of Clasico


Neymar looks set to travel with the Barcelona squad for Sunday's El Clasico against Real Madrid as the Catalans continue to fight his suspension for the potentially title-deciding clash.The Brazilian is in the midst of a three-game suspension for his red card and subsequent sarcastic applause of the officials in ...

Editorial »

Specter of war threatening world peace


North Korea has warned of preemptive strike against the South as the specter of war threatens the Korea peninsula.. Meanwhile, Talibans killed at least 140 Afghan soldiers on Friday in an ambush on the regime's forces in northern city of Mazar-i-Sharif. It is so far the deadliest attack on Afghan ...

Entertainment »

Will never do erotic genre like Hate Story 3 again: Daisy Shah


Actress Daisy Shah played a bold role in the 2015 erotic thriller "Hate Story 3". But she will never get into that genre again as she finds kissing a stranger very awkward.Asked what kind of characters she will never play on screen, she told IANS in an email interaction: "I ...

Entertainment »

I'm still an outsider in Hollywood: Chris Pratt


Chris Pratt is the main lead in two of the biggest Hollywood franchises - Jurassic World and Guardians of the Galaxy - and is one of its highest-earning stars, but the American actor still considers himself an outsider in Hollywood. The actor believes "Hollywood has a tendency to homogenise its ...

City »

BNP Standing Committee Member Nazrul Islam Khan, among others, at a rally organised by former students` leaders of Sirajganj district at DRU auditorium demanding release of BNP Vice-Chairman Iqbal Hasan Mahmud Tuku.


International »

Russia tried to use Trump advisers to influence election: Report


AFP, Washington :Rus­sian operatives tried to infiltrate Donald Trump's presidential campaign through his advisers, including foreign policy aide Carter Page, CNN reported on Saturday.CNN said this emerged through FBI intelligence gathering, which triggered an investigation into any possible coordination between Trump campaign operatives and Russian officials.US officials told the news ...

Cricket »

Pacer Taskin becomes Atom Gum brand ambassador


Bangladesh pacer Taskin Ahmed has been appointed as the brand ambassador of Atom Gum, a product of PRAN Confectionery Limited, said a press release.It was announced by Shakhawat Ahamed, head of marketing of PRAN Confectionery Limited at a program held in the city's hotel on Saturday. The Tiger pacer will ...

Cricket »

Shakib new T20 I Captain of Bangladesh Cricket team


Sports Reporter :Shakib Al Hasan has been appointed Captain of Bangladesh National Cricket (T20 I) team.Earlier, Mashrafe Bin Mortaza, the Captain of Bangladesh National Cricket (ODI & T20 I) team declared his retirement from T20 I format. Bangladesh Cricket Board (BCB) announced on Saturday that best all-rounder of world cricket ...

Editorial »

Dengue : Now an annual visitor


THE capital is yet again experiencing an early outbreak of dengue and untimely rains may be to blame. Like last year, Aedes mosquitoes, transmitter of the dengue virus, have bred early this year alarming authorities and city dwellers and health officials say there are chances their number would be larger, ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news