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There is a saying, "A healthy insurance market must have a base and a growing volume of business." In our present market, only a few types of general insurance businesses (schemes of insurance) are underwritten, mostly on compulsion basis. A vast field of private property remains outside insurance protection. No doubt the volume of business has increased to some extent, but the schemes of insurance are restricted to a few types viz, a few schemes under fire, marine, motor and accident insurance business are in practice. Many insurance schemes like Householder's policy, banker's indemnity insurance, Jeweler's block policies, loss of profit or consequential loss policy, employers liability, public liability, product liability, professional indemnity, Contractor's all risks, glass insurance, crop insurance, credit insurance, livestock insurance, deposit insurance, ATM booth insurance and many other non-traditional schemes of insurance are hardly underwritten in the private sector. Of course, the financial strength and lack of specialized knowledge of the new and smaller companies don't permit them to underwrite such risks. Even bigger companies are often shy of underwriting such risks. But for the sake of growing market more and more risks should be covered to minimize the loss. People should be persuaded and educated to buy new types of insurance products. Unless this is done, the companies will involve themselves in unfair competition in a limited market for procuring the same business.
Same is the case with life insurance. Life products are also restricted to a few traditional schemes. Various innovative products can be developed to cover different needs viz, accidents, medical needs, education/marriage of children, retirement benefits and other needs of human beings from cradle to death. But presently the life companies can't satisfy these needs satisfactorily rather they concentrate on a few products like endowment scheme, three/five stage policy and pension policy, etc. Although micro-insurance has brought about a tremendous improvement in the selling of life insurance policies but it has also given rise to many anomalies, viz, undercut of rate, high lapse ratio, misappropriation of fund etc.
It is thus obvious that insurance market in the country is not expanding and has of late come to a stagnant position. This view is supported by business statistics of the insurance industry:
n Forty-five non-life insurance companies and one state-owned corporation (Sadharan Bima Corporation) earned gross premium amounting to Tk 24,799.32 million in 2015 which was Tk 22,679.24 million in 2014. Non-life sector has experienced a downward trend in the year 2014 because of poor investment and slowdown of economic activities led by the political unrest. In Bangladesh, non-life premium mainly depends on import business and loan given by banks and growth of premium income depends on such business.
n Thirty-one life insurers and one state owned corporation (Jiban Bima Corporation) earned premium income of Tk 83,274.76 million in 2015. During 2015, the total life and non-life premium income was Tk 108,074.08 which have slight growth compared to 2014.
n Sectoral share of insurance industry to gross domestic product (GDP) at current prices is 0.38 per cent in 2015. Insurance penetration rate in Bangladesh is less than 1.0 per cent for the last consecutive years.
Insurers are in risk business. We know that human and material possessions are continually exposed to loss or damage by numerous destructive forces. It is the human instinct to take precaution and try to prevent the destructive occurrence but that is not sufficient to prevent the consequences of future uncertainty. It is, therefore, necessary to adopt more effective techniques or devices or methods to deal with the problem of 'Risk' in modern society. Insurance is one of the methods to deal with the problem of 'Risk'.
It is obvious that more the insurers of a country are competent and able to absorb more and more risk, the economy of that country become more vibrant and secured. In modern-day world, many complicated and new risks have emerged which require a matured insurance market to keep the society free from the onslaught of such risks. To mention a few such risks are cyber risk, climate change risk, Tsunami, flood, earth quake, etc. The damage caused by these sorts of risks is colossal and to cover such risks will require adequate capacity on the part of the insurers but, in my opinion, the non-life sector of our country is not adequately equipped to deal with such catastrophes.
HUMAN RESOURCE DEVELOPMENT: People are the real asset of an organization. The most important thing for a professional organization is to recruit suitable personnel who will serve the purpose of the organization in the best possible manner. Selection of right person to suit the job requirement through competitive examination amongst a large number of candidates, instead of pick and choose, should be the process of hiring employees of all grades. Human resources development is the crying need of the time so as to make privatization of the insurance sector a success.
I have gathered that most of the insurance companies do not follow scientific recruitment policy. Recruitment of staff/officers is done on pick and choose basis, sometimes having no relevance to job requirements and sometimes less qualified relatives of the high-ups in a company are given jobs in their own organizations. Due to this, insurance companies are suffering from shortage of qualified workforce.
The Insurance Development & Regulatory Authority (IDRA) should prepare guidelines for recruitment of personnel and insist upon the companies to follow the guidelines so that suitable manpower is built up for the betterment of the insurance industry of the country.
INSURANCE EDUCATION AND TRAINING: Training is another aspect which is interrelated with human resource development. Bangladesh Insurance Academy was established mainly to train insurance employees. Of course, the Academy is conducting training programmes from time to time but the response from the insurance companies is very poor. They are shy to spend money to train their employees.
Of late a few private training institutes have also started training programmes for the insurance personnel. Besides, Dhaka University has opened a faculty viz Banking and Insurance Department. The standard of these programmes should be upgraded.
Associate of chartered Insurance Institute, (ACII) and Fellow of Chartered Insurance institute, London are the recognized insurance degree all over the world. These degrees, can be obtained through correspondence course. Besides, other degrees viz, Charter life Underwriter (CLU), USA are also of very high standard and may be obtained through correspondence course. We have a few ACII's - and not a single CLU.
Insurance companies should encourage their employees to take up correspondence course provided by Chartered Insurance Institute, London.
Similarly, the insurance industry should organize seminars, symposiums, workshops, etc., both locally and in collaboration with international agencies. This will help transfer of knowledge and technical know-how and keep the local insurance industry abreast with developments in other countries.
It may be mentioned that the Insurance Development & Regulatory Authority Act 2010 has emphasized on training and holding of seminars, workshops, etc.
The writer is Consultant, Meghna Insurance Company Ltd.