The government, for the first time, has taken a move to formulate a national insurance policy aiming at expanding insurance business in the country through necessary reform initiatives.
The insurance regulator — Insurance Development and Regulatory Authority (IDRA) — has already prepared a draft in this connection saying it will be finalised soon.
When contacted, IDRA chairman M Shefaque Ahmed said: “We’ve prepared the draft. It will be finalised shortly. Then we’ll send the draft to the ministry of finance (MoF) for its final approval.”
The policy, entitled the National Insurance Policy-2013, will have short, medium and long term objectives. The policy, if adopted, will come into effect from the early 2014 and will expire by 2021.
The IDRA chief said one of the key objectives of the policy is to build confidence among the mass people about insurance industry. “We’ll explore all potential under the policy.”
Another key objective of the policy is to ensure insurance coverage for all private and public properties.
The draft policy says crop insurance will protect the farmers and other new and innovative products will be encouraged under the policy.
It said country’s farm land remains vulnerable because of the adverse impact of global warming. The temperature may rise by 2-4 per cent to flood the cultivable lands.
The draft noted that there was lack of planning in combating such type of natural disasters in Bangladesh, a country that tops the list of the most vulnerable countries to the climate change.
The expert panel which has prepared the draft said they will encourage new and innovative products to protect the interest of the farmers.
The policy seeks to raise its (insurance industry) contribution to the country’s gross domestic product (GDP) to 3.0 per cent from its present level of less than 0.5 per cent.
He said health insurance will be introduced under this policy so that the poor get medical facilities.
It noted that social insurance products might be protective tools for the 31 per cent people still living under the poverty line.
Weak organisational capacity, lack of professional people and governance are the key challenges in implementing the policy, the draft policy said. It also identified lack of adequate capital in the companies, high management cost by the insurers and absence of healthy competition in the industry as main challenges.
Sources said the government will require amending the insurance act of 2010 to adopt the policy.
Naba Gopal Banik, a member of the IDRA is the head of the committee formed to prepare the policy. Bangladesh has now 73 life and non-life insurance companies.
-With The Financial Express input
