5 insurers hold 81% of life funds

Five companies are dominating the country’s insurance sector, holding nearly 81 per cent of the life funds, owing to their best customer service and timely settlement of claims.

They are MetLife Bangladesh, National Life Insurance Company, Delta Life Insurance Company, Jiban Bima Corporation, and Meghna Life Insurance Company. There are 35 insurance companies in Bangladesh.

The Insurance Development and Regulatory Authority (IDRA) data shows the sector’s life fund was Tk 34,325 crore at the end of December 2022, with the five companies holding Tk 27,650 crore.

Multinational company MetLife grabbed the top position in 2022 with Tk 14,608 crore in its life fund, which was 42.55 per cent of the total figure in the sector.

National Life Insurance Company was in second place with a life fund of Tk 4,773.62 crore, which was 13.91 per cent of the total amount.

Delta Life Insurance Company came in the third position with a Tk 4,006.55 crore life fund (11.67 per cent) while Jiban Bima Corporation and Meghna Life Insurance Company had Tk 2,473 crore (7.17 per cent) and Tk 1,787.91 crore (5.2 per cent ) in their life funds respectively.

Factors driving growth

Industry insiders say timely settlement of insurance claims, new products, and modern policies have helped these companies thrive.

IDRA former executive director SM Shakil Akhtar told The Business Post the companies performing well had sustained customers’ trust, adopted modern policies, and settled claims on time.

One of the reasons why these companies are doing well in the life fund is that they have earned the trust of customers by settling claims on time, according to National Life Insurance Company Chief Executive Officer (CEO) Md Kazim Uddin.

Former managing director of Jiban Bima Corporation Md Zahurul Haque said, “Jiban Bima Corporation does not ignore insurance claims like many other organisations. If a person is eligible to receive claims, the company pays them on time.”

“Jiban Bima Corporation is always vigilant in protecting the rights of customers. In return, customers put their trust in the company. This is the main reason for the company’s growth.”

IDRA’s Shakil further said some companies are doing very well because they are focusing on upholding customers’ trust.

MetLife is particularly well-reputed for their various modern policies and good customer service, he said. “Similar to MetLife, a number of other local companies have also developed a stellar reputation among their customers.”

Why others are not catching up

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

“Many companies are not even getting qualified managing directors and do not have the elements needed for improving operations,” he added.

Kazim said most companies do not settle claims.

“When a company refuses to fulfil its commitment to 10 clients, the latter will share their negative experiences with thousands of others. Hence, clients are losing confidence in those companies. That is why these companies are not doing well.”

What is life fund?

A life fund is a portfolio which can be made up of stocks, bonds, cash, and alternatives that the policyholders’ life insurance premiums are paid into and claims are paid out of.

Such funds are not available for sale directly to retail investors and can only be purchased by pension providers and insurers.

A look at the past 5 years

According to the annual reports of life insurance firms, the sustainability of life fund earnings has increased gradually over the years. The life funds of all life insurance companies in 2017, 2018, and 2019 were Tk 30,887 crore, Tk 32,493 crore, and Tk 34,400 crore respectively.

In 2020, the amount stood at Tk 36,108 crore, which dropped to Tk 35,889 crore at the end of 2021, marking a decrease of Tk 219 crore.

Life fund is the amount that any company gets from premium earnings after paying all expenses and insurance claims. As per regulations, insurance companies have to invest 30 per cent of their life funds in government treasury bonds every year for risk management.