Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Monday, February 18, 2019 03:10:40 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Digitalization of the Insurance industry

By
16th-May-2018       
Comments
Share your thought
Post a comment »
Read all () »

M M Monirul Alam :
The insurance industry of Bangladesh is a very promising and a significant player of financial sector. Insurance industry can play a vital role in the economic development of a country through providing safety net to the society. To increase the capital base of a country, the contribution of life insurance is immense as life insurance collects deposits in the form of premium from the people for a longer period. As a result, the insurance company has a very important contribution in GDP and capital accumulation. A country like Bangladesh where there is lack of capital- especially longer term capital needs, it requires the support from insurance companies to build a strong capital base in the country.
But it is a matter of fact that in Bangladesh insurance companies are not contributing to the GDP up to the mark. The growth of insurance is also very slow. Besides, innovation in the sector has not been much witnessed after the Liberation War. However, for the blessings of technology, insurance industry of Bangladesh now can bolster in a way that has not been observed earlier. The digital revolution in the country will also add greatly to this wave of development.
The digitization of Bangladesh has become a priority of the country. As a result, the government is patronizing for advancing the country through digital technology. As a result, the private sector contribution for digital generation build up along with the government initiatives have become a national agenda and both the parties are handling lots of projects for material development as well as skill development. According to BTRC (2017) currently, there are more than 148.77 million mobile subscriber and 80.48 million active internet users and the number is growing at a rate of 3% per month. Most of the internet users are basically mobile phone based and a significant part is composed of smartphone users. Besides, about 57% of the population of Bangladesh are aged between 15-54 years who are highly tech savvy. The digital revolution in the country is already in force with significant momentum.
There are 78 insurance companies in Bangladesh among which there are 32 life insurance companies, of which one is government run and two multinationals and 46 non-life insurance companies of which one is government and rest 45 are private sector non-life insurance companies. Among the life insurance companies, there are 8 Islamic life insurance companies. According to the World Bank data (2016) the overall penetration rate of insurance companies is 0.9% (Premium as % of GDP) where for life insurance it is 0.7% and for non-life it is 0.2%. Insurance Development & Regulatory Authority (IDRA) is the controlling body of insurance companies. All the insurance companies are regulated by the Insurance Act 2010. The profitability status of the life insurance companies is not in a very promising state. Only a few life insurance companies are doing well. Besides, most of the companies especially newly approved companies are not performing well except one or two. The operations of most of the companies are not digitalized. Besides, the companies are following traditional distribution model and selling almost the same products. There is also not much variation in the life insurance products in the market even in case of pricing.
In this era of sustainability, all the companies need to follow the rule of sustainable development. Ignoring the criteria of sustainable development will make survival in the long run difficult for most of the companies. The insurance companies need to follow the three fundamental perspectives which are economic (Profit), social (People) and environmental (Planet). These three pillars are also known as '3P'. For ensuring the economic perspective of the life insurance companies, they have to earn adequate profit for sustainability. For the insurance industry, fundamentally, profit comes from two sides. First, collection of premium with lower cost considering the cost of risk and second, investment of the fund in the profitable venture. This economic motive of the insurance companies should not be distinct from the people or planet. The people or social contribution includes the wage and 'give back' to the society through community engagement. In this perspective, the life insurance companies have to do a lot. The competitive wage is one of the key concern in this regard. Besides, undertaking different social stake can be a good way to contribute to the society but life insurance companies are not doing this significantly. These type of activities are also significant for life insurance industry to regain the image of the industry as it is highly controversial. Moreover, Bangladesh is an environmentally risky country and the life insurance companies also can contribute in this stake. Providing life and health insurance to the marginal people will not only diversify the risk pool of the insurance companies but also will aid to the survival of people in the changing environment.
It is noteworthy to mention that if the insurance industry wants to employ this 'Triple Bottom Line' in its operation the urgency of technology cannot be ignored. To increase the profitability, the companies need to search for alternative distribution channels as the current commission based distribution system is very costly. Technology can assist significantly in this regard, through the use of technology, alternative channels can be introduced which can be highly cost effective and also allow the companies to reach the marginal customers. One of the key objection of the customers against the life insurance companies is the 'Lower surrender value'. This problem can also be solved if the distribution cost can be lowered through digitalization which will allow the customer to get more liquidity from the insurance products. For reducing operational and distribution costs, the digital technology can play a vital role. Online life insurance products selling is not available in Bangladesh. Besides, innovative products are also essential for selling through online. Products selling through Mobile apps can be another solution for the distribution problem as a huge number of people are using mobile phones and it will help eradicate the geographical barrier of the distribution channel. For reducing operational cost, digital underwriting, digital claim processing, reduced paper work through digital communication can make the industry more vibrant. On the other hand, the use of artificial intelligence can help the industry to reduce human effort and significantly increase the efficiency. Through the use of analytics, customer insights gathered can be more accurate which will lead to identify the buyer persona and will aid to develop innovative products that can boost the industry profitability.
However, in reality, only very few companies are adopting technology. But it is a matter of hope that some companies are coming forward in this regard. Some companies have started to initiate the process as a few have launched mobile application for service purpose i.e. My Guardian by Guardian Life, Projapoti by Metlife, Nibedita by Green Delta. Some companies are also working to develop online insurance products that should be available soon.
All the industry leaders need to understand the importance of the adoption of digital technology for the insurance industry for ensuring sustainability. The regulator (IDRA) also needs to formulate necessary regulation and framework for such system to check the fraudulent activities that may arise in the digital system. Besides, the customers need to be more positive about the insurance sector as it is very essential for financial security of their own lives and for the protection of their families during any distress.
 (The writer is the Managing Director & CEO of Guardian Life Insurance Limited. E-mail: md@guardianlife.com.bd)

Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Take hard-line against tax eviction by working foreigners


THE international organisations and development partners working in Bangladesh did not surrender or renew the Customs Passbooks of their 395 non-Bangladeshi staff till the date. The National Board of Revenue had directed them to complete the task within the January 31 deadline, newspapers reported. According to NBR, employees of 21 ...

City »

40 DU students get Sumitomo Corporation Scholarship


City Desk  :A total of 40 under-graduate students from different academic years of Dhaka University (DU) have been awarded Sumitomo Corporation Scholarship of Japan today February 17, 2019 at Nabab Nawab Ali Chowdhury Senate Bhaban of the university.Dhaka University Vice-Chancellor Prof. Dr. Md. Akhtaruzzaman presided over the function while Treasurer ...

Cricket »

Sri Lanka sensation Perera hailed for Test-winning heroics


AFP, Colombo :Kusal Perera became a national hero in Sri Lanka on Sunday after scoring an unbeaten 153 to guide his country to a sensational first Test victory in South Africa.The country's cricket legends and politicians lauded Perera, who has become a linchpin for the ailing national side since fighting ...

International »

Japan PM nominated Trump for Nobel after US request


AFP, Tokyo :Japan's Prime Minister Shinzo Abe nominated US President Donald Trump for the Nobel Peace Prize last autumn after being requested to do so by Washington, a Japanese newspaper reported Sunday.Washington sounded out Tokyo over the possibility of nominating Trump for the prize after his landmark summit with North ...

Entertainment »

Shraddha Kapoor obliges fans amidst a busy schedule


Actress Shraddha Kapoor obliges for some selfies with her fans amidst a busy schedule. The actress was pictured today in London where she is working on her upcoming project Street Dancer 3D. The official Instagram handle of Manav Manglani had recently posted pictures of her taking selfies for her fans ...

Editorial »

Ensure safety for patients in the hospitals by any means


CITY'S Shaheed Suhrawardy Medical College Hospital has started operations after a messy situation caused by fire on Thursday evening. Director of the SSMCH said a total of 1,174 patients, including 72 children, were shifted to other government hospitals after the fire originated at the children's ward on the second floor ...

Sports »

Stunned Japan swimmers back stricken Olympic pin-up Ikee


AFP, Tokyo :Japanese swimmers have vowed to step up their efforts in support of Rikako Ikee, the poster girl for the 2020 Tokyo Olympics who has announced she is suffering from leukaemia.Earlier this week, the 18-year-old swim queen tweeted that she had cut short a training camp in Australia after ...

Football »

Capoue sends Watford into FA Cup quarter-finals at QPR's expense


Etienne Capoue's goal in first-half stoppage time was enough to give Watford a 1-0 win away to Queens Park Rangers (QPR) on Friday that saw the Hornets into the quarter-finals of the FA Cup.Both sides had opportunities in an even opening period that belied the fact that Watford are eighth ...

International »

Turkey has not revealed all about Khashoggi killing : Erdogan


AFP, Ankara :Turkey has not yet revealed all the information it has discovered about the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul, President Recep Tayyip Erdogan said Friday."We haven't given all the elements we have at our disposal," the Turkish head of state said during an ...

Entertainment »

Fagun Haway' draws huge acclamation


Entertainment Desk :The premier show of 'Fagun Haway', a movie based on the 1952 Language Movement, draw a large number of film loving people at cinema halls.Actor turned director Tauquir Ahmed directed the movie which was released simultaneously at 52 cinema halls across the country.The story of the movie was ...

City »

The Namaz-e-Janaza of Poet Al Mahmud was held at the Jatiya Press Club on Saturday.


Editorial »

Save the Sunderbans to save the Royal Bengal Tigers


FOR the constant rise in sea levels and rapid climate change, the famous Royal Bengal Tigers of the Sunderbans could be disappeared within 50 years, especially from the Bangladesh part, according to a new study published recently in the journal Science of The Total Environment. A team of Bangladeshi and ...

City »

Members of RAB-2 nabbed one on Friday from Narayanganj for taking money from government officials from different areas in the country impersonating Anti-Corruption Commission official.


.

Cricket »

Feels like it`s a blessing to just be playing again: Steyn


Agency :Dale Steyn, the South African mainstay, continued to impress on his comeback trail, as he bowled at high pace and picked up four wickets over a long spell on Day 2 of the first Test of the two-match series versus Sri Lanka in Durban.The veteran fast bowler bowled at ...

Entertainment »

Shanta Jahan feels comfortable in hosting


Sheikh Arif Bulbon :Popular host of present time Shanta Jahan has to be engaged with hosting round the year in and outside the country in different stage shows and TV programmes. Besides hosting, she has more identities. She is also a model and TV actress. But she always feels comfortable ...

 
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