Few companies liable for negative conception of insurance sector

Rumours spread in the market when few insurance companies do not settle insurance claims, but it does not spread that most of the insurance companies are paying the claims. Due to the errors of a few companies, people have a negative conception of insurance sector, said Zenith Islami Life Insurance Chief Executive Officer SM Nuruzzaman in an exclusive interview with The Business Post’s Shahin Howlader

What is the specialty of your organisation?

You will be happy to know that Zenith Islami Life Insurance provides some rare services. Apart from that, we have Bangla website and apps so that people from remote rural areas can avail of our service online. Besides, our clients can easily pay for their policies through banks and the mobile banking service Rocket.

Moreover, our company has more than 20 policies including health, pension, children, three-instalment or four-instalment insurance policies which are quite popular among clients. The pension policy holder will get monthly pension benefits. We provide separate insurance policies for eight severe diseases which also attract clients greatly due to their special features.

There is a negative image of the insurance sector among people, what is your opinion in this regard?

A large portion of people has a negative perception of insurance companies. Many people don’t get their insurance claims for years even after the tenure of their policy concludes which is the key reason behind this. But it should be noted that currently, most insurance companies pay their clients’ claims. Mistakes of a few insurance companies significantly contribute to spreading negative conceptions in society.

Besides, although the Insurance Act was enacted in 2010, its regulations have been formulated recently. Now there is no chance for any insurance company to cheat if they want to. Insurance Development and Regulatory Authority (IDRA) has clear directions about the money management of insurance companies. Gradually, people will have a positive perception of the insurance business.

What is your advice to increase the insurance sector’s contribution to the GDP?

In Bangladesh, the insurance sector doesn’t contribute much to the GDP compared to the neighbouring countries. Although we are ahead of Pakistan in many sectors, Pakistan’s insurance sector has a higher contribution to GDP compared to Bangladesh. The actuarial crisis in the insurance sector, foreign-oriented reinsurances, and the non-compulsory nature of some insurance policies are the key reasons behind the insurance sector’s failure to contribute more to the GDP. The insurance sector will be able to increase its contribution to GDP if the authorities assist to resolve these issues.

Health insurance is mandatory in many countries. What is your advice about making health policy obligatory in Bangladesh? 

The government should make health insurance compulsory in the country. We have realised the significance of health insurance during the global Corona pandemic. Besides ensuring health service to policyholders, this would also expand the insurance sector.  

Our company provides health insurance policy coverage for Rajshahi University students against only Tk 250 premium. Under the policy, the students can claim Tk 80,000 for ailments and Tk 2 lakh for demise. 

What is your suggestion to increase the popularity of health insurance?

Insurance companies should come forward in this regard. The companies should provide separate services based on different diseases under different policies by signing agreements with hospitals. Besides, IDRA should take initiatives to popularise health schemes among people. For example, companies should mandatorily have a minimum percentage of the health insurance policy among all the policies.

Like the whole world, Bangladesh is also on the verge of an economic recession. Do you think this could impact the insurance business in 2023?

The year 2023 brings about a number of challenges. Although there is a possibility of economic recession, I think it will not have a major impact on the insurance sector as it has long-term investments. Normally, clients can’t withdraw their money for at least two years after paying for policies. This is the basic difference between banks and insurance companies.

So, the insurance companies will not face any negative impact of economic recession this year. We have managed to overcome the challenges during Covid pandemic successfully. We are even planning to enter the share market (IPO) in 2023.

Only a few companies are successful in the insurance sector. Why are others not succeeding in the insurance business?

Companies that spend excessive management costs despite not having adequate earnings fall behind. Companies should consider how much clients’ money they can spend before making any spending decisions. But the reality is that companies are overspending. On the contrary, some companies have managed to earn the trust of customers by paying insurance claims on time. And those who fail to do so are losing customers’ trust. Companies that are not doing well in the industry may also lack good management, skilled manpower, and good policies.

The money from the life fund is usually misused despite having a policy. What is your advice on the investment of life funds?

The IDRA has a number of guidelines regarding the investment of life fund money. In my opinion, only seeking quarterly reports from the insurance companies is not enough; IDRA should also monitor the life fund investments regularly. Insurance companies won’t be able to misuse the money if IDRA regularly monitors the matter. At the same time, this will also contribute to the further flourishment of the insurance sector.