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29 March 2024


Business Insider Bangladesh

Pandemic puts a brake on insurers’ income

Ahmed Shawki || BusinessInsider

Published: 04:10, 1 March 2021   Update: 21:04, 1 March 2021
Pandemic puts a brake on insurers’ income

The coronavirus pandemic has put a brake on the growth of Bangladesh’s insurance sector, which suffered a degrowth for the first time in 12 years.

The coronavirus pandemic has put a brake on the growth of Bangladesh’s insurance sector, which suffered a degrowth for the first time in 12 years.

Industry insiders said the pandemic cost general insurance companies more than that of life ones as major components like marine insurance for import-export and property insurance declined significantly.

According to the latest data of Insurance Development and Regulatory Authority of Bangladesh (IDRA), incomes of life and general insurance companies declined by 1.50 percent and 7.46 percent respectively last year compared to the same period of the previous year.

Khaled Mamun, chief executive officer of Reliance Insurance Limited, said the actual decline of the general insurance sector last year could be about 10 percent to 15 percent.

“Property insurance is almost half of the business. Marine insurance is about 35 percent of the business and the rest 15 percent is held by motor vehicle, engineering and construction insurance,” he told the Business Insider Bangladesh.

Mamun said marine insurance witnessed a major fall due to pandemic-driven lockdown of ports in Europe, the USA, China and India which are major business partners of Bangladesh.

Also, a latest directive of the Bangladesh Road Transport Authority that cancelled mandatory third-party insurance for motor vehicles also put a dent on a regular income of general insurance companies, he said.

“During the end of the year some losses were offset due to engineering- and construction-related insurance,” he said.

Farzanah Chowdhury, managing director of Green Delta Insurance, said the onslaught of the Covid-19 pandemic affected insurers’ business badly.

“But it was not as bad as we expected in the second quarter of 2020.”

On the business prospect this year, she said the industry was yet to be clear on the impacts of the pandemic.

There are 77 insurance companies operating in the country. Of them, 45 are life and 32 non-life insurers. The sector as a whole earned less than Tk 14,000 crore in premium last year.

Insurance penetration rate, which is calculated as ratio of total insurance premiums to GDP, in Bangladesh is around 0.5%, one of the lowest in the world.

Recently, the insurance regulator has taken a number of initiatives to benefit policy holders including renewal of lapsed policies without late fees to help them fight the pandemic.

The IDRA announced the offer as part of its observing insurance service fortnightly from March 1 to March 17.

Nagad
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