Life insurance policies have been long associated with providing significant support to families and individuals in the case of unexpected losses. And rightfully, the global market for life insurance stands at a whopping 1 trillion mark. The unpredictability of life, unfortunately, gives life insurance products quite a market.
We go to every extent to protect the people we love. The life insurance spectrum enables us to safeguard our families by offering them financial support in unforeseeable circumstances. The world we live in today is going through a massive change, and this change is fueled by volatility and vulnerability. These factors combined deem life insurance products an inescapable need.
Yet Bangladesh, one of the fastest-growing countries in the world, is home to some people who remain skeptical about life insurance and all it has to offer. Life insurance policies became a common choice in Bangladesh in the 1970s and 1980s due to government-backed efforts. While some Bangladeshi people are open to buying life insurance, most are not.
What keeps the majority of Bengalis from embracing life insurance policies? Here are some reasons why life insurance products cannot grasp the market share they otherwise can in Bangladesh.
1. Lack of Awareness
One of the major problems with life insurance in Bangladesh is the lack of awareness among the general public. Most Bengalis remain oblivious to the advantages of life insurance or how it works. The insurance boom arrived in Pakistan and Bangladesh back in the 1960s. However, the projected results were never achieved due to political instability and lack of basic knowledge about the insurance spectrum. Today, there’s a dire need to educate people about insurance policies.
2. Transparency and Accountability
The lack of accountability and transparency has remained a perpetual problem in the Bangladeshi insurance policy market. There have been countless instances where insurance companies have denied claims or misrepresented the terms of policies. This has drastically sabotaged the public’s trust in life insurance policies. It’s the need of the hour for Bangladeshi officials to restructure the insurance market, providing people with clarity.
3. Low Penetration Rate
The low penetration of life insurance is another problem that keeps insurers from achieving their potential. According to the World Bank, to this day, Bangladesh’s life insurance penetration rate remains less than 1% of its GDP. These stats indicate that the larger Bangladeshi population does not have access to life insurance policies, leaving them vulnerable and exposed to financial setbacks and the horrors of the uncertainty of life.
4. Lack of Public Access to Insurance Policies
The distribution channels for insurance policies remain limited in Bangladesh. Today, most policies are sold through brokers and life insurance agents. This limits the general public’s access to high-quality insurance coverage, limiting their options. Unqualified agents are another factor that remains a hurdle in the growth of the insurance policy market. Most agents involved in the purchasing process have little to no knowledge about modern market trends.
It’s safe to say that much must be done to improve the overall framework supporting Bangladesh’s insurance policy market. Also, the regulatory bodies must adopt a vigilant approach to protect the consumers and the insurance ecosystem.
The history of Bangladesh’s insurance boom is worthy of a dedicated read. The efforts Khuda Buksh put in to make Bangladesh’s insurance system were why the market boomed in the 60s. Are you curious about reading the fascinating history of the life insurance boom in Pakistan and Bangladesh? If yes, Khuda Buksh: The Pioneer of Life Insurance in Bangladesh is the perfect book for you.
Authored by none other than Muhammad Obaidur Rahim, the son of the Wizard of Life Insurance, it offers a complete insight into the transformation of the insurance scene in Bangladesh and beyond.
Order your copy of the book today and read through the story of a hero unsung.