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11 April, 2021 08:26:24 PM
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Transforming vulnerability into strength: Insurance sector in Bangladesh

Insurance serves socioeconomic resolutions and, at times, takes on the role of a social institution that encourages the mutual good and benefits to reserve social mandate. Insurance diminishes the necessity for a rainy day fund
Nargis Sultana
Transforming vulnerability into strength: Insurance sector in Bangladesh

“Mujib Borsher Ongikar, Bima Hok Sobar" - this is the theme of this year’s National Insurance Day highlighting the involvement of every person with insurance. Nowadays 62 companies are functioning under Insurance Act 2010 out of them-18 are life insurance companies including 1 foreign company and 1 is state-owned company, 44 general insurance companies including 1 state-owned company. Insurance sector is known to be a vital element of our financial system notwithstanding the fact that it is impacted by a multiplicity of factors which are dragging its improvement behind. Factors such as lack of technical knowledge of employee, poor IT support, inefficient management, incomplete outreach, delayed claim settlement, publicity shortage, claim of excessive money than the actual losses, lack of trust, poor financial position, higher cost, etc. are remarkable. But if we had utilized this sector well, our economy would have been far better. The emergence of Covid-19 has proved the urgency of the sector more than before. Unfortunately, majority people of Bangladesh are unaware of the facilities provided by the insurance companies. The insurance companies are falling behind in attracting customers. So, it is their urgency of making them conscious about the positive effects which will be created if they purchase insurance policies. More promotional activities are to be adopted in order to reach the mass people and make them understand the economic and financial impact of insurance.

Insurance companies make payment whenever the covered loss occurs due to the proximate cause cited in the insurance contract. Insurance claims payment have a plethora of benefits associated with these. For instance, auto repair shops, home improvement stores and healthcare facilities receive many claim payments to fix cars, rebuild homes and provide medical treatment. By doing these, they play a role in the economy where they can give taxes and create more employment opportunities. To educate consumers on safety concerns, insurers assemble and evaluate information in order to make them aware of their security concern. For example, life/health insurers continue to warn the public about the destructive effects of smoking and opioids. As the property is concerned, insurers used to appraise the effectiveness of municipalities’ fire suppression systems and provided incentives to upgrade them. Insurance serves socioeconomic resolutions and, at times, takes on the role of a social institution that encourages the mutual good and benefits to reserve social mandate. Insurance diminishes the necessity for a rainy day fund. As the premiums are collected by the insurance companies in advance, mid and long-term investments can be made easily in profitable sectors. Developers cannot afford to risk the entire value of their firm to compensate victims of a wide variety of risks during and following the construction of new buildings, roadways and bridges, etc. So, insurance enables infrastructure improvements. Insurers provide not only financial security but also peace of mind to households and businesses, and they are a vital source of long-term capital, providing firmness to financial markets and the overall economy.

The father of nation, Bangabandhu Sheikh Mujibur Rahman, used to work in insurance industry besides doing politics. So, this can exemplify the importance of this sector. Later after the independence, he took multiple initiatives involving laws and policies to enhance the industry. Presently, Prime Minister Sheikh Hasina has emphasized on this sector as a way of nourishing and strengthening the economy. The government has decided to propel few people abroad to achieve degrees in actuary, which is a positive initiative as they will be able to make contribution for the development of this sector. PM along with World Bank will also work collaborate to bring this sector under automation and a project of Taka 632 crore will be used properly. Hopefully, strong and strengthened financial system is waiting with all these fruitful initiatives.

The writer is Assistant Professor, Department of Finance & Banking, Comilla University, Cumilla, Bangladesh. E-mail: [email protected]

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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