Insurers’ assets dip Tk 8,000cr in a year

The assets of both life and non-life insurance companies dipped by Tk 7,985cr in 2020 when compared year-on-year, triggered by the sector’s diminishing income against rising expenses amid the Covid-19 crisis.

Unaudited financial reports for 2020, which the insurance companies recently submitted to the Insurance Development and Regulatory Authority (IDRA), reveal that the firms had assets totaling Tk 45,388.68 crore at the end of 2020, a sharp drop from Tk 53,374.01 crore in 2019.

Among these firms, the 35 life insurance companies’ assets dipped from Tk 41,174.62 crore in 2019 to Tk 36,215.59 crore in 2020, a decline of Tk 4,959.03 crore.

Besides, the 46 non-life insurance companies’ assets dipped from Tk 12,199.49 crore in 2019 to Tk 9,173.09 crore in 2020, a decline of Tk 3,026.4 crore.

5 firms witness Tk 3,474cr dip in assets

According to the IDRA data, at the end of December 2020, Fareast Islami Life Insurance had assets worth Tk 2,646.35 crore, a drop from Tk 4,347.94 crore in 2019. This shows a decline of Tk 1,702.59 crore in a year.

National Life Insurance Company had assets worth Tk 4,004.82 crore in 2020, compared to Tk 4,580.49 crore in 2019. This shows a drop of Tk 575.67 crore.

The assets of Delta Life Insurance dropped by Tk 559.01 crore last year. In 2020, the firm had assets worth Tk 3,862.40 crore, a drop from Tk 4,421.41 crore in 2019.

Popular Life Insurance Company’s assets dropped by Tk 395.98 crore to Tk 1,869.30 crore in 2020, a decline from Tk 2,265.28 crore in 2019.

The state-owned Jiban Bima Corporation had assets worth Tk 1,981.65 crore in 2020, a dip from Tk 2,222.39 crore in 2019. This shows a Tk 240 crore drop in the firm’s assets.

Speaking to The Business Post, the corporation’s Managing Director Jahurul Haque said, “Jiban Bima Corporation has enough assets to pay off all insurance claims. Besides, the company’s assets have not been reevaluated yet.

“If it is done, the volume of this firm’s assets will increase further.”

Why did the assets dip?

Industry insiders told The Business Post that the business of life and non-life insurance firms had declined significantly due to the Covid-19 crisis. Pandemic restrictions had made it difficult for insurance workers to move around, and group and online insurance businesses do not have much traction in the country.

Majority of the insurance companies’ expenses continued amid the pandemic, but their income did not go up on the same level, they added.

Addressing the issue, IDRA’s Executive Director and spokesperson SM Shakil Akhter said, “The Covid-19 pandemic impacted every sector in the country. The insurance firms tackled a record number of claims during the crisis, but their income did not increase in the same ratio.

“However, lack of discipline could have caused a few such firms to lose assets in an unnatural rate.”

Bangladesh Insurance Association’s President Sheikh Kabir Hossain said, “Insurance firms were among the most impacted during the Covid-19 crisis, but they did not lay off staff during that period.

“Insurance claims from deaths had increased. So, their income was diminished, but expenses continued. For this reason, the assets [of insurance firms] did not increase as they should have.”

Sadharan Bima Corporation Director AKM Ihsanul Haque said, “There are three main reasons why business in the country’s non-life insurance sector has declined. Those are – reduced tariff rate in fire and marine insurance sector, closure of third-party motor insurance, and a drop in imports and exports.

Pragati Life Insurance Ltd’s Chief Executive Officer Jalalul Md Azim said, “During the Covid-19 restrictions, exports and imports shut down and many companies shut operations.

“Earnings from premiums dropped in 2020 when compared year-on-year, but payout of insurance claims had increased significantly. These factors contributed to the decline in insurance company assets.”