Bangladesh:Average insurance policy lapse rate seen as at least 50%
An analysis of the financial reports of insurance companies in Bangladesh over the previous five years shows that an average, half of all insurance policies purchased in a year lapsed after the payment of the first-year premium.
Dr Helal Uddin Ahmed, a retired Additional Secretary in the government, writing in The Financial Express, says this and adds that several factors explain the lapses. These include negligence of the insurance agents, who demonstrate laxity in following up with clients subsequent to the purchase of a policy. There is also a lack of awareness among clients as well as mis-selling by agents who often lack adequate education.
According to the figures provided by Bangladesh Insurance Association, about 70% of life insurance policies become redundant after the first year. Previously, insurance agents received commissions of 35% to 70%. However, in March 2012, the commission system was revamped and the regulatory authorities capped the commission rate for agents at 15%.
Source: Asia Insurance Review