Newly licenced life insurance companies incurred losses throughout the year of 2015 due to their high management cost and declining premium income.
A total of 13 new life insurance companies earned a total premium of Tk117 crore against their management cost of Tk118 crore last year.
A total of 31 life insurance companies including those newly licenced made an excessive expenditure of Tk263 crore for management purpose, according to a review report prepared by the Insurance Development Regulatory Authority (IDRA).
Of the 31, 30 local life insurance companies saw a marginal income of Tk623 crore last year compared to Tk562 crore in the previous year.
The only foreign life insurance MetLife Bangladesh made the highest income of Tk1,928 crore in 2015 compared to Tk1,921 crore in 2014.
The insurance companies could not do well in business due to not proper implementation of existing rules and regulations, said Ahsanul Islam Titu, managing director of Shandhani Life Insurance.
“I do not know why we are not being able to have a fare share of the country’s economic growth as the government suggests that it is moving well ahead,” he said.
Management expenses of new insurance companies exceeded a certain limit due to poor business performance, said a senior executive of a new insurance company.
He said new companies are still struggling to get business as they are going through sluggish business climate from the beginning of their journey since 2013.
Moreover, lack of experienced manpower is also accounted for poor business, he claimed.
Of the new life insurance companies, two made less profit last year than the previous year. The two companies are NRB Global Life Insurance and Protective Islami Life Insurance.
The management cost of both the companies was higher than their premium income.
NRB Global earned a premium of Tk5.63 crore last year compared to Tk8.17 crore in the previous year. The total management cost of the company stood at Tk7.72 crore with an excessive expense of Tk2.88 crore during 2015.
The premium income of Protective Islami Life stood at Tk5.44 crore in 2015, down from Tk6.21 crore in 2014.
The total management cost of the company stood at Tk7.97 crore with an excess expense of Tk5.12 crore, according to the IDRA report.
The only state-owned life insurance company Jiban Bima Corporation bagged lower income last year compared to that of the previous year. The premium income of the company decreased by 7.88% to Tk342.67 crore in the year 2015 from Tk372 crore in the year 2014.
