Chapter 5 Opportunities for Growth in the Digital Insurance

Market in Bangladesh

The digital insurance market of Bangladesh is almost in the phase of change and development

and this is due to some factors that are coordinating in a series. With the increasing trend of

digitalization across the sectors Bangladesh insurance industry also eyeing to leverage new

technologies and innovative models to fulfil the new expectations of consumers. With the

continued rise in smartphone usage, the popularity of the internet, and Fintech the insurance is

able to reach more people and serve them more efficiently than before.

In addition, opportunities include micro-insurance, low-cost high impact policies targeting lower

and rural insurance consumers. With Bangladesh’s insistence on improving the country’s

financial inclusion, insurers can significantly contribute if only they develop the right products

that are not only appealing but easily attainable and affordable by the population.

Some of the legal and environmental factors are also evolving to be friendly as the government

encourage the use of technology in the finance sector, thereby propelling the growth of the

digital insurance market.

5.1 Regulatory Support and Initiatives

There are various regulatory support and initiatives that have taken place in order to support this

recommendation.

The legal framework of insurance industry of Bangladesh is continuously developing with much

emphasis on information transformation to ensure that the market is capable of addressing the
present and/or future needs. The primary institution in the process is the Insurance Development

and Regulatory Authority (IDRA) that promotes different actions aiming at increasing the

popularity of insurance services and rejuvenating the industry. This push is important in a

country which insurance density stands at 0.40% of GDP, making the market here under-

penetrated. As of now, there are 78 insurance companies operating in Bangladesh: 35 are life

insurers and 43 are non-life insurers, the insurance business is yet to dynamically expand through

online channels.

5.2 Centralized Digital Platform

Another aspect of IDRA’s current modernization program is the creation of a single, fully

automated system that will eventually include all private and public insurance companies. This

platform has been created with the intention to house policy issuance, sharing of premium, as

well as claims management all in one environment. The integration of such mapper is to improve

the transparency of the lidar data and to simplify the organizational interface and thus to

minimize the organizational overload of data. This change is expected to cut down drastically

customer complaints and harassment cases in a country that has always relied on manual and

paper based practices in their insurance services.

5.3 Mandatory Digital Practices

The Bangladeshi insurance industry has undergone a few major regulatory changes in recent

years, particularly with the requirement for digital practices including e-receipts and electronic,
online claims filing. These changes have changed insurer’s customer relations radically. Insurers

also note that the use of technology accelerates the cycle of processing claims and making

payments thus clearing some of the many hurdles. Not only does this offer better results in terms

of customer satisfaction but it also makes the company closer to global standards. Since

Bangladesh has over 115 million of the internet-using population of which 70% now use

smartphones, these digital policies have helped to make insurance easy and effective for both the

urban and the rural dwellers.

5.4 World Bank Collaboration

Renovation of the insurance sector has been effectively supported by the Bangladesh Insurance

Sector Development Project which is funded by the World Bank. This initiative is aimed at

improving the capacity of the regulation authorities in the country as well as at extending

insurance outreach services to the needy states. Thus, it contributes to the development of the

digitalization agenda by supplying funds and ideas that would buttress the business structures of

both state-controlled and privately owned insurance companies. Its role is also important for

achieving the WB’s other key objectives of supporting Bangladesh’s insurance growth to

promote financial inclusion and to build more stable financial architectures. The project

identified among the strategic directions its focus on digital solutions that will improve

availability and efficiency of insurance services, especially in rural and sensitive populations.

5.5 National Insurance Day

A memorable day that marks the industry yearly is National Insurance Day that falls on the first

of March. It also acts as a tool to create awareness about importance of insurance and to
encourage the society of Bangladesh towards financial risk management. This is a reform

supported by the government whereby people are encouraged to embrace the insurance industry

mainly by provision of business awareness programs, meetings and exercises that aims to

enlighten the general public the importance of both a life and non-life insurance. It is especially

important also in Bangladesh where most people do not consider insurance as an essential part or

risk cover but rather as something they have to spend on. The celebration also marks how

insurance services are going digital to change the current generation and those who never

embraced conventional insurance policies.

5.6 Driving Financial Inclusion and Market Expansion

As of the present, the insurance market of Bangladesh is relatively nascent as far as penetration

rates are concerned, however the market has entered a phase of growth. This results in 171

million plus people most of whom are either underprivileged or uninsured, which is a great

opportunity for growth. The government administration has paid much attention to financial

literacy, while IDRA has been intensively worked on the digitalization processes to close this

gap. Hence Insurance Companies can now come up with idea of Micro Insurance which suitable

for the vast rural population and the lower income earners. These include mobile financial

services (MFS) such bKash and Nagad; products are small scale, cheap coverages for health,

agriculture and life insurance, thereby helping the uninsured and those in rural areas. When

Bangladesh is in a process of transformation to a middle income country, the insurance solution

for protecting the valuable assets in individuals and businesses becomes highly important. The

upward trends in the small and medium sized enterprises, foreigners investment and enhanced
consumer expenditure means that in the future, the market for insurance products will have

larger coverage.

5.7 Technological Advancements

The integration of advanced technologies into the insurance sector offers numerous

opportunities:

Big Data and AI Utilization: Big data, and, more specifically AI, will help insurance companies

enhance the underwriting process and risk evaluation. In a way, these technologies allow insurers

to come up with closer-to-perfect products that address particular customer needs – boosting

customer satisfaction.

E-commerce Growth: The outbreak of the COVID-19 also brought the purchase of insurance

products online a notch higher. Overall, this presents a great opportunity for insurers and their

selected lead generation partners to better improve their online presence and targeting

mechanisms.

Mobile Financial Services: Mobile banking available in Bangladesh seems promising where

insurers are capable to provide the convenient way for premium payments. This availability leads

to more citizens interacting with insurance services from home, especially in rural areas, where

the physical infrastructure of banks is still a work in progress.

5.8 Changing Consumer Preferences

Interestingly the young people of Bangladesh are tending towards the use of online transaction

instead of the offline. This shift presents opportunities for insurers:

agents in promoting the products and services to the modern, sophisticated consumers. Creating

and sharing appropriate content on these social media platforms will force potential customers

and the youth to relate with the brand.

Product Innovation: This situation calls for the development of new insurance products that are

unique and well aligned to meet the needs of consumers in the market. Such can be Micro

insurance solutions for people with low income or special segments such as e-commerce.

5.9 Market Penetration and Economic Growth

Despite having a relatively low insurance penetration rate (approximately 0.40% of GDP), there

is substantial room for growth:

Raising Awareness: This means increasing the level of concern and demand for the insurance

industry can come from the public. Such steps include the specific campaigns such as National

Insurance Day which is taken to popularize products and their utility among the people of the

country.

Investment Opportunities: From the current form of Bangladesh’s economy along with the

gradually rising middle-class people, possibilities are there to enhance insurance products by

regarding them as the management of risk. This is where insurers come in handy so that they can

provide products which can help to cover an investment against some risks.
Finally, the findings show that the digital insurance market in Bangladesh possesses great

potential for growth due to the regulatory, technological, consumer preference, economic

initiatives. When these opportunities are embraced and old issues adequately addressed; insurers

could significantly boost their market presence in the market and help to develop the overall

economy of the country. While Bangladesh is marching towards modernization, the insurance

sector in its implementation is to the front line of this transformation to fulfill the demand of its

people.