Non-life premium growth stagnates

Dhaka,  Monday,   2016-09-22
Published : 22 Sep 2016, 00:39:21

Non-life premium growth stagnates

Insurers see little chance of recovery in 2016
Jasim Uddin Haroon


Non-life insurance premium growth in the country virtually stagnated, falling below 1.0 per cent in 2015 from over 10 per cent the previous year, according to an official count.

Industry-insiders, explaining the lacklustre performance, said a few economic factors were largely responsible for keeping the insurance market depressed in the year under review.

Non-life premium growth stagnatesThe non-life or general underwritings are closely linked with country's trade and commerce, implying that the investment and other economic activities had remained almost stagnant in 2015.

Industry people said they had less-than-expected business in 2015, leading to fall in their underwriting profits.

They also were not that optimistic that the ongoing year will make any difference by way of strengthening of the market in view of different signs of slow economic activities.

According to the Insurance Development and Regulatory Authority (IDRA), country's 45 non-life insurance firms earned in the past calendar year Tk 32.25 billion in premium, including that of the state-owned Sadharan Bima Corporation (SBC).

In 2014, it was Tk 31.95 billion and in 2013 Tk 28.94 billion.

Md Imam Shaheen, CEO at the private-sector Asia Insurance Company, said slow investment in 2015 is a key reason behind the fall in the gross premium incomes of the companies.

"Non-life business is very much linked with new investment that spurs import of capital machinery, marine insurance and fire insurance etc," Mr Shaheen said.

He also said there were many big policies requiring re-insurance options had lower rates.

There are rules about taking re-insurance options from abroad after a certain amount of money to be insured.

However, Mr Shaheen said he was struggling to reach the target of his company this year as well.

Sujit Kumar, chief underwriting officer at Prime Insurance Company, finds two reasons behind the almost 'stagnant' situation in the non-life insurance business. They are slow growth in trade and commerce, including export and imports, and an unhealthy competition among the general- insurance firms about quoting tariffs.

There is no insurance for the back-to-back letter of credit applicable for the country's biggest export-earning garment industry.

Mr Kumar said: "Overseas reinsurance rates are too low compared to local rates, leading to fall in the earnings as well." He said they fear that the situation may remain almost same in 2016.

"I analyse the data for my company and so far I think that there will be no significant improvements in terms of business growth this year [2016]," Kumar said.

He said marine insurance is a lifeguard for the non-life business and this completely depends on imports.

jasimharoon@yahoo.com
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