The most publicly traded general insurers have made moderate profit in the first half of this year despite economic slowdown and political uncertainty.
Out of 35 listed general insurance companies, five made hefty profits, 25 moderate gains and five suffered losses.
In the first six months of 2013, the combined profits after taxes of companies stood at Tk1.8bn, a rise of more than 7% from Tk1.6bn over the same period a year ago.
“The industry did not do very well as profits battered by the slow economic growth and political uncertainty,” said Bangladesh Insurance Association president Sheikh Kabir Hossain.
Bangladesh’s GDP growth came down to 6.03% in the current fiscal year, the lowest in four years, according to provisional estimates of Bangladesh Bureau of Statistics.
Hossain said the end of unpaid business and new regulatory rules helped gain some moderate gains this time despite the fact that insurance coverage growth was much less than expected.
He said earnings of some companies soared as the insurers spent less on commission paid to their sales agents.
Painting a bleak picture on the insurance companies for the next half, he said looming political uncertainty in the run up to general election might put adverse impact on the economic growth.
That means fall in imports further and weakening exports, cutting down insurance coverage capacity of the companies, he said.
Five top insurers that made robust profits are Green Delta, Purabi General Insurance, Islami Insurance, Agrani Insurance and Federal Insurance.
The worst performing companies are Phoenix, City General, Dhaka Insurance, Karnaphuli and Janata Insurance. Their combined losses stood at Tk73.2m in the first half compared to the same period a year before.
A drop in sales of motorised vehicles, chaotic political environment and declining imports are the main reasons behind dull insurance business, said insurers.
Md Fazlul Haque Khan, Managing Director of Janata Insurance Company said overall economic situation was not favourable for us during the first half of 2013.
He blamed restive political situation and declining imports for the poor performance of some insurance company. Khan alleged, in the first half, some companies made profits breaching rules set by the regulator.
Earlier the insurance companies used to pay 40% commission on average to woo clients, but the regulator set the highest ceiling at 15% last year in an effort aimed at creating a level playing field for all general insurers.
Nasir Uddin Pavel, vice chairman of Karnaphuli Insurance Company, said the industry had passed very bad days during January-June period as the investment and imports suffered during the time.
“A drop in sales of motorised vehicles hit my business,” he said. It is mandatory for a user to insure the purchased vehicles.
In the first 11 months of the last fiscal, overall import payments posted a negative growth of more than 9% to $29.48bn from $32.42bn a year earlier, according to Bangladesh Bank.
