The financial industry of Bangladesh has witnessed seamless growth in the last few years through adopting modern technology, namely fintech and has tapped more potential arenas in the process. However, while the banking industry, one of the sectors of the overall industry, has been the key beneficiaries of the tech-friendly system, the insurance industry lags in ensuring a more sustainable stature. Despite having a high potential market, Bangladesh’s insurance penetration is one of the lowest in the world.
According to a Sigma research by the Swiss Re Institute, Bangladesh’s insurance penetration rate in 2020 was barely 0.4%, meaning fewer than four out of every thousand Bangladeshis had insurance coverage. With only $1,323 million in premiums in 2020, Bangladesh is ranked 69th in the world for insurance. Currently, Bangladesh has 78 insurance firms: 32 life insurance companies and 46 non-life insurance firms. Fifty-three of them have stock listings on stock exchanges.
However, if the above numbers picture a lower presence of insurance in Bangladesh, there are strong underlying ways as well to change the scenario as a whole. Over the past few years, Bangladesh’s insurance market has experienced rapid growth. Although both the life and non-life insurance sectors continue to expand, they are nevertheless falling short of the anticipated market penetration despite their tremendous potential.
Following in the pathways of fintech, the insurance industry has a potential prospect to navigate the sector digitally to march forward. ‘Insurtech’, the tech-based model, has been a thriving solution globally.
In the Asia-Pacific region, there are 335 insurtech companies, while in India, 110 such companies operate alone. However, in Bangladesh, ten companies work with insurance companies to ensure digitally-enabled insurance services.
The past few years have been promising in creating a tech-friendly environment in Bangladesh. Ushering in more startups and tech-based Innovation has set the ground for the insurance industry to explore the digital solution for an overall upliftment.
Including 184.23 Million mobile users and 52.58 million internet users, the potential market has enlarged multiple times compared to earlier years.
On top of that, an inclusive economic model, including collaboration among insurance companies, MFIs, NGOs, banks and local and global development organisations, has created more channels and options for the insurance industry to go tech. A combined effort by the stakeholders, therefore, will not only benefit the insurance companies but also help create a more sustainable ecosystem.
Insurance has always been a slow-paced process and service than banking and other associated financial institutions globally. Its wide reflection is visible in Bangladesh too. Additionally, a lack of transparency and publicity has contributed to this scenario too. Insurtech, with its integrated features and a combined ecosystem, can reduce the issues to a greater extent and usher in a new prospect of increasing penetration.
