The Insurance Development and Regulatory Authority (IDRA) has issued a circular granting permission to life insurance companies in Bangladesh to offer comprehensive health insurance policies. This move marks the end of the monopoly previously held by non-life insurers in the health insurance market. The circular allows all 81 insurance companies, both life, and non-life, to compete for market share and offer health insurance products. This development is expected to enhance competition, leading to more affordable policies for consumers.
Health insurance has gained popularity, particularly due to the COVID-19 pandemic, with corporate clients being the major customers in Bangladesh. Previously, life insurers could only provide health coverage as supplementary products, known as “riders.” With the new regulation, life insurers can independently design, price, and sell medical insurance policies.
Industry insiders believe that this policy reform will increase coverage and affordability, benefiting both insurers and policyholders. However, the success of the reform depends on strengthening the distribution network, with suggestions for partnerships with banks through bancassurance. While health insurance presents opportunities, insurers face challenges due to high claim frequency and short policy durations, which can result in cash burn for the companies.