New companies struggle to get a foothold in business

Poor service quality and lack of skilled workforce are among issues holding back new companies venturing into Bangladesh’s thriving general insurance sector from winning over clients and grabbing the market share, stakeholders say.

This has allowed five companies among the 46 operating in the sector to occupy 50 per cent of the market. 

Data from Insurance Development and Regulatory Authority (IDRA) show that all the companies had earned Tk 4,402.06 crore in premium at the end of December 2020. Five companies – Sadharan Bima Corporation, Green Delta Insurance Company Limited, Reliance Insurance Limited, Pioneer Insurance Company Limited and Pragati Insurance Limited – had collected Tk 2,191 crore or 49.78 per cent of the amount.

Sadharan Bima topped premium collection with Tk 1,017.55 crore or 23.12 per cent of the total amount, according to the insurance companies’ unaudited financial report-2020 submitted to IDRA.

Green Delta collected Tk 367.67 crore (8.34 per cent), Reliance Insurance Tk 293.71 crore (6.67 per cent), Pioneer Tk 290.55 crore (6.60 per cent) and Pragati Tk 222 crore (5.04 per cent).

Factors driving growth

Industry insiders say a timely settlement of insurance claims, new products and modern policies helped these companies dominate the market.

IDRA Executive Director and spokesperson SM Shakil Akhtar told The Business Post that companies performing well had sustained customers’ trust, adopted modern policies and settled claims on time.

Sadharan Bima Corporation Director Ihsanul Haque told The Business Post that reinsurance was his company’s key earning source. He said around 72 to 75 per cent of the company’s premium came from reinsurance. 

“One of the reasons behind the robust premium business of these five companies is reinsurance,” he said. 

Pioneer Insurance’s Chief Executive Officer (CEO) Tariqur Rahman said they always ensure that the clients’ interests remain intact. “Our customers are keeping faith in us, which is one of the driving factors behind our growing business,” he said.

Rahman said they had everything needed for a good premium business. “Companies which are doing well also maintained their service standard,” he told The Business Post.

What’s holding back other companies?

Sena Kalyan Insurance’s CEO Shafik Shamim said a delay in insurance claim settlement was one of the key problems. “Some companies are doing well by addressing the issue,” he said. 

Pragati Insurance’s CEO Rezaul Karim said every industry has small and large companies, but currently, around 90 per cent of insurance companies lack a skilled workforce.

“Many companies aren’t even getting qualified managing directors and don’t have necessary elements needed for doing better,” he added.

Sadharan Bima Corporation Director Ihsanul Haque noted that most companies don’t do business and depend on others for everything. They don’t have any business expansion plan.

“Sadharan Bima Corporation distributes 50 per cent of the government’s general insurance business among the insurance companies. No other country has such a rule,” he said. “The insurance companies run [their operations] with the Tk 3-4 crore they earn from here a year. That’s why they don’t go for further business development.”