Bangladesh:Insurers await imminent introduction of bancassurance

Bancassurance is in the final stage of being introduced in Bangladesh, awaiting a government order allowing this distribution of channel.

The Insurance Development and Regulatory Authority (IDRA), the regulator of 78 insurance companies in Bangladesh, sent its opinions on bancassurance operations to the Financial Institutions Division (FID) under the Ministry of Finance in June, reported The Financial Express.

Earlier, the Bangladesh Bank (BB), which is the central bank, formed a high-powered committee and prepared a technical report on the issue. The IDRA gave its opinions on the central bank's technical report. Sector insiders told The Financial Express that they now need a government order to introduce bancassurance in Bangladesh.

"The FID now needs to be instructed to allow it," said Istiaque Mahmud, head of bancassurance at Guardian Life Insurance who is also a member of the BB-constituted committee. He said that with positive comments made by the IDRA, there is no major hurdle to introduce bancassurance in the country.

The IDRA report said bancassurance would help raise the insurance penetration rate in the country, which is now less than 1%. The report noted that both India and Nepal had introduced bancassurance much earlier and obtained a good response from bank clients.

The report added that after approval from the Ministry of Finance, the IDRA will formulate a policy on the matter for insurers.

Source: Asia Insurance Review

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