Fresh insurance policies, better reach key to boosting GDP contribution

The country’s insurers have to develop new insurance schemes and products to bring majority of the population under coverage and to increase contribution of the sector to the GDP, Brig Gen Md Shafique Shamim (retd), chief executive officer of Sena Kalyan Insurance Company, told The Business Post’s Shahin Howlader in an interview

SKICL, established in 2013 as a concern of Sena Kalyan Sangstha, provides insurance services and involved with fire, marine, engineering, motor, aviation, and miscellaneous accident
insurances.

What is behind SKICL’s success among 4th gen insurance companies?

I have been running SKICL following guidelines of the Insurance Development & Regulatory Authority (IDRA) since the company’s inception. We are always on alert to keep the company’s image spotless as it operates under
the army.

We have two basic differences from the country’s other insurance companies – Sena Kalyan Sangstha is the owner of all shares of the company, and its profits go to a welfare fund. As a result, officials of the company face no pressure over profit sharing or fulfilling targets.

We work as per the rules without toiling to increase profits through irregularities, which has contributed for the speedy growth of this company.

Why would people choose SKICL over any other? What is its specialty?

Not all non-life insurance companies were service-oriented in the country, because this sector was commission-based in the past five years.

Agents used to take customers to companies that provided larger amounts of commission, but such a practice was unfriendly to the customers.

IDRA’s current and former teams implemented many directives in the last few years, including scrapping the commission system, which has brought transparency into the insurance sector.

People began looking for better features in insurance companies after the commission-based system was eliminated, and in that context, there is no chance of fraud in SKICL as it is operated by army personnel.

People have faith that they will not be defrauded by the SKICL, which is the first reason customers choose us.

Secondly, we have been consistently paying insurance claims since the company started its journey. We even paid insurance claims of beneficiaries after the 2018 US-Bangla Airlines crash in Nepal, which was unprecedented.

Such level of performance helped boost SKICL’s popularity, and encouraged the consumers to choose this company.

SKICL has many schemes, which one has the highest demand?

In case of non-life, fire insurances are the key source of business for such companies. Along with that, many other small schemes are popular including accident and travel insurance which many insurance companies do not cover.

We made an agreement with the Runner Group on a personal accident policy. As a result, car buyers of Runner Group would get up to Tk 2 lakh compensation against Tk 25 premium. Besides, we have been providing travel insurance since our inception.

Many countries made travel insurance mandatory during the Covid- 19 pandemic. We provided a large number of travel insurances with premiums of only Tk 1,500 to Tk 1,600. Although this scheme provides less profit, it helps us popularise other schemes among the customers.

What is your opinion on third party insurance to be re-launched in Bangladesh?

Third party insurances were cancelled in the country for a logical reason. Many people did not know that they could claim money after taking
a third party insurance policy.

I believe it is a legal right of a third party to receive insurance claims after facing any road accidents and the country should have this kind of insurance.

Currently, the IDRA is planning to re-launch insurance policies for motor-vehicles, which should be implemented as soon as possible. The government is losing a large amount of remittance as no insurance is available for motor-vehicles. All vehicles of the country should get insurance.

What should customers look for in a fire insurance policy?

Though it is called fire insurance, it also covers other risk factors related to storms, rains and floods. Every insurance company should carry out a pre-underwriting survey before providing their services.

This survey will provide these firms with information about fire safety equipment, water sources and fire-fighting systems in different companies. But most of the insurance users and providers do not follow this rule.

Besides, insurance agents and workers on the grassroots level do not have any knowledge in this regard. Larger companies have skilled manpower regarding this issue, but smaller entrepreneurs do not.

So in case of accidents, small entrepreneurs suffer more damage. Before opening any fire policy, insurance users and providers both should know details about the advantages and disadvantages of it.

Why do insurance companies have poor service track records?

Insurance companies in the country face many issues, such as lack of qualified and skilled manpower, job security, low payment and dated business methods.

As a result, most of the insurance companies fail to progress. The recent Covid-19 pandemic has exacerbated the already existing issues of this sector.

Does the private insurance sector lack government’s support?

The government is positive about the private insurance sector’s development, but insurance companies and IDRA are failing to utilise this opportunity.

To get a large amount of assistance from the government, the insurance sector has to prove that it is contributing significantly to the country’s GDP. But the insurance sector contributes below 1 per cent.

We could demand government support if we can increase our current rate of contribution in the country’s GDP. But we failed to reach the desired position. In the past five years, many of us failed to achieve acceptance from the stakeholders.

I believe that the sector will be able to increase its contribution to the GDP by paying insurance claims in time and following regulations. When we manage to do this, it will allow us to seek support from the government in organs that need the most backing.

What is your advice for increasing the insurance sector’s contribution in GDP?

We are still practicing ancient rules of fire, marine or motor insurance. We have to unveil new insurance schemes which will help cover the majority of the population.

Companies should also launch agriculture, health, personal incident and travel insurances, which will bring 50 per cent of the population under insurance schemes. To increase contribution in the GDP, we have to boost micro-insurance.