Insurance sector faces demand-supply gap

The insurance sector is facing a serious gap between demand and supply, as most products, designed by urban elites, ignore the needs of rural and low-income people, said Md Main Uddin, professor of the Department of Banking and Insurance at the University of Dhaka.

“Insurers need to engage directly with potential policyholders and move away from forced sales towards voluntary, trust-based adoption,” he said.

Prof Uddin made the statements at a seminar titled “Prospects of Insurance in Bangladesh”, organised by the Department of Banking and Insurance at the University of Dhaka, held at the Faculty of Business Studies yesterday.

He added that despite Bangladesh’s large population and growing middle class, insurance penetration remains below 0.5 percent, reflecting deep structural and governance problems rather than a lack of market potential.

“The country needs to view insurance not just as a capitalistic transaction, but as a welfare-oriented social tool,” he said.

Citing global examples such as Japan, Prof Uddin explained that insurance works through collective pooling, where the underuse of services by some allows life-saving support for others during disasters.

“This mindset is crucial for building long-term resilience and intergenerational security,” he added.

On governance, he described the sector’s challenges as a “crisis of will” rather than a lack of technical skill.

He criticised cases where companies misuse funds instead of settling legitimate claims, warning that such actions harm public trust and threaten financial stability.

To prevent a wider economic crisis, he stressed the importance of strengthening and balancing Bangladesh’s four key financial pillars -- banks, insurance, bonds, and capital markets -- through consolidation, ethical enforcement, and policy reform.

Md Shahidul Islam Zahid, professor and chairman of the Department of Banking and Insurance, said that although the insurance sector has long been underestimated, Bangladesh’s rapid economic growth has greatly increased assets and risks, making insurance essential for sustainable development.

Despite Bangladesh’s large population and growing middle class, insurance penetration remains below 0.5 percent

He added, “By engaging industry leaders and understanding the skills needed over the next five to ten years, the department aims to continuously update its curriculum and research focus.

“Our ultimate goal is to produce competent graduates with strong practical knowledge who can provide high-quality service and contribute meaningfully to the financial and insurance sectors.”

INDUSTRY LEADERS STRESS PROFESSIONALISM

Syed Shahriyar Ahsan, chief executive officer of Pioneer Insurance PLC, said that for insurance to fully contribute to GDP, it must be treated as a mandatory, professionally managed sector, supported by skilled human resources, strong regulation, and modern curricula.

“With the right policies and institutional commitment, the insurance industry can become a powerful driver of sustainable national development,” he added.

ABM Nurul Haq, senior consultant at Global Insurance PLC, highlighted the social importance of the profession. “An insurance career is more than just a job -- it is a noble and dignified profession. Insurance work involves social service, offering great personal satisfaction, and an insurance professional is the client’s family’s closest and most reliable friend in times of need,” he said.

Insurance penetration in Bangladesh currently stands at around 0.5 percent, one of the lowest in the world, compared to the emerging markets’ average of 3.3 percent, India’s 3.2 percent, and China’s 2.4 percent, according to the Insurance Development and Regulatory Authority.

In 1972, Bangladesh nationalised its insurance industry through the Bangladesh Insurance (Nationalisation) Order, except for postal life and foreign life insurance. Today, the country has 82 insurance companies -- 36 life insurers and 46 non-life insurers -- providing coverage to approximately 16.5 million people through a range of policies.