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Dhaka Tribune

Insurance sector still suffers from lack of trust, goodwill and support

As it is still not compulsory, govt deprived of revenue worth Tk878 crore annually from vehicle insurance

Update : 01 Mar 2024, 12:43 AM

To develop the insurance industry, it is imperative to increase its contribution to the country’s overall economy by increasing public awareness about insurance. 

Since 2000, March 1 has been celebrated as Insurance Day. 

Sheikh Kabir Hossain, president of Bangladesh Insurance Association (BIA), an organization of insurance companies’ owners, feels that these objectives have not been very successful.

In an interview with Dhaka Tribune, he said: “As in previous years, various events are organized on Insurance Day across the country, to make this sector more popular among the mass population. Its vision and mission are to make different types of insurance more popular. But still, people are neither overly aware, nor interested in doing insurance. I think we still have a lot of work to do here.”

The insurance sector’s contribution to the development of the overall economy is 5%.  It is clear that if the country’s insurance sector is developed, it can expand the economy. But it was supposed to be more, Hossain also said.

Asked about the main reason for this, he said: “Some insurance companies have gone bankrupt. As a result, there is a trust crisis among customers. There are also some other issues among bureaucrats about support for this sector. That means, the lack of goodwill in the insurance sector has not been eliminated.”

Acknowledging bureaucratic hurdles or lack of support he said: “In any country of the world, no vehicle can ply on the road without insurance. So on the last insurance day, I requested the Prime Minister to reintroduce the act. I proposed to amend a section of the Road Transport Act, 2018. The prime minister agreed with my point, but it still didn’t happen.”

As insurance is not compulsory, the government is deprived of the revenue of Tk878 crore every year from vehicles. 

Of this, Tk849 crore can be charged as taxes and value added tax (VAT) and another Tk28 crore as stamp duty.

“The Road Transport Act was made in 2018 under the influence of transport owners. It allows the vehicle to be driven on the road without insurance. Since then, we have been reporting that as the insurance sector is suffering, the government is also losing revenue,” the BIA chief further said.

However, the National Insurance Day is celebrated for the Fifth time in the country’s history. Prime Minister Sheikh Hasina is expected to inaugurate the event, at the Bangabandhu International Conference Centre in Dhaka.

The rise of insurance

Bangabandhu Sheikh Mujibur Rahman joined Alpha Insurance Company of Pakistan on March 1, 1960. 

To commemorate his joining day at the national level, the Bangladesh government declared March 1 every year as National Insurance Day on the recommendation of the Insurance Development and Regulatory Authority on January 15, 2020.

It was celebrated as the first day on March 1 of that year.

Therefore, the government has decided to celebrate March 1 as the National Insurance Day, every year.

At the district and upazila levels of Bangladesh, processions, insurance fairs, discussion meetings, cultural programs etc. are celebrated to promote the development of the insurance industry, increase public awareness about insurance. However, the government upgraded National Insurance Day from ‘B’ category to ‘A’ in 2022, commemorating Bangabandhu Sheikh Mujibur Rahman. 

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