“Lack of insurance literacy, awareness and compliance are key barriers in boosting the growth of the sector. So, to increase insurance contribution to GDP and attracting people to open policy, stakeholders have to focus on awareness building and strengthening compliances”, Farzanah Chowdhury, managing director and CEO of Green Delta Insurance told DhakaTribune’s Mehedi Hasan in an interview.
She also spoke about the present scenario of the insurance sector, its development and the challenges it faces, as well as Green Delta’s success and future plans.
Farzanah, a chartered insurer, is the first and youngest female CEO in the industry. She was recognized by the United Nations Global Compact as a Local SDG Pioneer in 2016 for Women’s Economic Security for her initiatives through Nibedita, which is a comprehensive insurance scheme for women.
Farzanah started her career as an executive in Green Delta Insurance. She also worked at BRAC as well in the early years of her career.
How do you evaluate the present insurance sector scenario in Bangladesh?
The age of Bangladesh’s insurance sector is more than 45 years, but unfortunately this industry has never gotten the attention or focus it needs. As a result, there are many misconceptions and misperceptions about this sector.
However, a huge number of companies are now growing in this market despite lack of compliance and governance issues.
Sadharan Bima Corporation (SBC) is the only state-owned general insurance corporation in Bangladesh. The insurance company is playing a dual role. As a general insurance company, SBC competes with us while at the same time, it works as reinsurer. SBC is not doing well as a reinsurer, so the local insurance companies reinsure with foreign companies. Therefore the SBC needs to be strengthened.
Moreover, national insurance policy has not yet been implemented. There are some very important acts and policies in the insurance sector that have not been reviewed yet. These issues need to be fixed quickly.
What are the reasons for the confidence crisis in the insurance sector? What is your opinion in this regard?
The whole insurance sector gets affected due to people’s bad impression of some life insurance companies. They collect deposits from customers but when the scheme matures, they don’t settle it. People have lost confidence in the insurance sector because of such misconduct.
These insurance companies have to take a more responsible role to regain people’s trust. The sector will otherwise collapse if we do not work in full swing with professional approach.
Non-life insurance companies would not give over 15% commissions to agents from August 1 to comply with the regulatory instruction. Has it been implemented?
The government instructions could not be implemented previously due to lax monitoring. But now the Insurance Development & Regulatory Authority (IDRA) is monitoring the matter and has taken an initiative to form a compliance cell. The regulatory body strictly instructs non-life insurance companies to not give over 15% commissions to agents.
As always, we are following the IDRA directives. However, my personal opinion is that there should be no commission in the insurance sector.
It is alleged that the insurance sector is facing a shortage of skilled and qualified manpower. Why are eligible people not coming into this sector?
The insurance sector suffers from awareness and publicity deficiencies. The importance of insurance policy has not been explained properly to the public. One of the major problems is that we have failed to attract the younger generation. To change the scenario, awareness about insurance must be created in schools, colleges and universities. Plus we should put more emphasis on training to create skilled and qualified manpower.
The insurance sector’s contribution to the GDP is very low. How do we increase it?
The insurance sector’s contribution to GDP is less than 1%. Lack of awareness, compliance and governance issues plays a major role behind it.
In this growing economy, our portfolio is only at Tk 3,500 crore, where 78 insurance companies are operating in the country.
Insurance policy should be compulsory in every sphere of our life. We are discussing all the stakeholders in this regard. Personal accident insurance should be mandatory. Everyone must have a personal accident insurance (PA policy). Every car must have an insurance policy.
It is time now to build awareness among people about insurance schemes. Insurance should be included in the financial inclusion.
Bangladesh’s insurance sector scenario started to change rapidly after 2010. We are jointly working now with the regulatory body and are moving towards diversifying business from traditional business. In the last one year, the insurance sector has settled the claims amounting Tk3,000 crore.
Transparency will increase if all companies are listed in the capital market. Then everyone will be forced to follow the rules. Besides, all insurance companies should come to the digital platform.
Green Delta launched weather index-based crop insurance in 2016. What is the current status of crop insurance?
In the year of 2016, we launched weather index-based agri-insurance in association with International Finance Corporation (IFC). We have reached 20,000 farmers already and are planning to launch the service commercially from December this year. There were no banks to assist us in the last four years, however, many banks are coming forward to work with us now.
What is the future plan of Green Delta Insurance?
We want to create one stop financial services of international standards. In the future, we will be focusing on other financial services in addition to insurance.
Even though insurance policy is our main goal, we will be providing all financial services on one platform and the sky is our limit.
What message would you like to give to the youth and how can they participate in a growing industry like insurance?
The insurance sector will only turn around if the new generation comes into this sector with innovative and diversified ideas. This sector badly needs the young generation’s participation and its energy, confidence and passion.
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