GREAT EXPECTATIONS: THREE WAYS INSURANCE INDUSTRY CAN THRIVE IN 2020
Dhaka February 16, 2020
The unprecedented growth of Bangladesh’s economy is, in many ways, supported by its hard working, extremely talented young population. The economy’s growth rate in 2020 has been projected to be 8%. According to the recent World Economic League Table 2020 report, Bangladesh is on its way to become the 25th largest economy in the world by 2034 from its current position of 40th . In the Financial Year 2018-19, two thirds of Bangladesh’s GDP was contributed by five sectors – Industry, Wholesale and Retail, Transport, Agriculture, and Construction. The rest comprises of contributions from various sectors including Banking and Insurance.
When it comes to insurance, the life insurance penetration in Bangladesh is only 0.5% which means that the vast majority of our fellow countrymen are not accessing all the options available to them. At the same time, it shows insurance services have significant room to grow and thrive in the coming days.
Insurance protects people’s financial potential and wellbeing, and makes sure that they have one less thing to worry about when unpleasant and unexpected circumstances occur. That is why a growing economy needs a thriving insurance sector.
In the year 2020, the following three elements will be a key force in driving the progress in Insurance sector.
1. Building Awareness:
Insurance is not a top of mind financial management tool in Bangladesh as there is lack of awareness and understanding about insurance and its benefits among the people. Bangladesh has also made significant socio-economic developments and now, life expectancy of Bangladeshi people stands at approximately 72 years. That means as they live longer, they also need to consider protecting their financial potentials. We also see that many customers face difficulty in differentiating the features of banking and insurance products though these products serve very different purposes. Considering all of these factors, broader, customer friendly communications would certainly help more potential customers reap the benefits of insurance.
2. Harnessing Changing Technology:
Technology will continue to shape the way people interact with us and our products. We need to adopt the mindset that technology is not always disruptive rather it can also bring immense opportunities. Life insurance is a very different solution that solves a problem no one wants to have, but we need to use technology to serve customers in this space better, to build trust and educate customers about how their needs can be met. There is a general perception that insurance claim settlement process can be cumbersome and lengthy which adds to a reluctance to engage with insurance products. Technology can play a role here to make things easier, better, and faster for customers.
3. Focusing on Customer Interactions:
As insurers, our interactions with our customers have been infrequent and transactional in nature. We interact with them when they first take out their policy, even then this transaction is often through an agent. We interact with them again when their family needs to claim the policy at which point we deliver our promises. There is a clear scope of improvement on customer interaction in insurance industry. Our research shows that customer experience ranks just as highly as price and the products/services themselves. So there is an opportunity to focus on interacting with customers in a way that builds loyalty and trust. Insurers need to think of thoughtful ways of keeping in touch with customers to enhance their lives.
Syed Hammadul Karim
General Manager, Bangladesh