Private-sector insurance business, both life and non-life, grew at a slower pace in 2023 due to higher inflation and subdued overall business activities.
The life-insurance sector expanded by 8.2 per cent to about Tk 114.84 billion, but the growth rate was more than 2.0-percentage-point lower compared to 2022, according to the annual report of the Bangladesh Insurance Association (BIA) that represents private insurers in Bangladesh.
The non-life insurance sector recorded a modest growth of 1.74 per cent to Tk 42.351 billion in 2023. This reflects a decline of 8.56 percentage points compared to the growth rate of 2022, as stated in the report published last week.
The BIA unveiled the report at its 37th annual general meeting held in the city on Thursday, with its president Nasir Uddin Ahmed (Pavel) in the chair.
The report highlighted that the foreign reserves fell below US$27 billion and the local currency sharply depreciated against the US dollar, causing a dollar supply crisis and affecting import-dependent businesses and the reinsurance sector.
Since March 2022, the local currency Bangladeshi Taka (BDT) depreciated by 28 per cent against the US dollar primarily due to a controlled exchange rate mechanism aimed at addressing the BDT’s overvaluation, the report added.
Mr. Narayan Chandra Rudra, Chief Executive Officer (CEO) of Meghna Life Insurance Company Limited, told The Financial Express on Sunday that rising prices of essential commodities in the retail market are a major factor affecting the insurance business growth.
“Inflation remains high, and many people are withdrawing money from deposits. Under such a circumstance, how can the life insurance business grow?” he questioned.
Mr. Rudra also noted a lack of confidence in the financial market among the general mass, which may further hinder the sector’s growth.
Md. Imam Shaheen, Managing Director and CEO of Asia Insurance, a privately-owned non-life insurer, explained that the non-life insurance business is closely tied to the country’s overall economic performance.
“If there is a rise in imports and exports, our business grows,” Mr. Shaheen said, pointing out that the previous government’s decision to nullify mandatory motor insurance has had an adverse impact on the sector.
“I think the absence of mandatory motor insurance is another key reason for the slow growth,” he added.
In 2023, 46 non-life insurance companies, including the state-owned one, generated gross premiums of Tk 59.533 billion while the 36 life insurance companies, including one state-owned entity, recorded gross premiums of Tk 122.735 billion.
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