End-to end digitalization of insurance business operation is crucial for ensuring the transparency, accountability and availability of insurance products to the mass market. Digitalization of insurance business operation will help to guarantee the superior customers service, reducing the human errors and improving the overall satisfaction of the policyholders. These digital transformations of insurance business will benefit to positively brand the insurance products to the larger segment of people that insurance is needed for ensuring the safeguard against any unfortunate events or occurrences.
Insurance business is one of the oldest and most undeveloped industries of Bangladesh compared to Bank or Non-Bank Financial Institutions. According to Swiss Re data, a rewound global re-insurer, Bangladesh’s overall insurance penetration stood at a meager 0.57% in 2018. In the year 2017, the penetration was 0.55 where 0.41% was contributed by life and 0.19% by non-life insurance companies.
Insurance penetration has not increased in Bangladesh due to the image crisis and lack of qualified manpower, traditional mode of services and lack of adequate positive awareness. However, compared to previous years overall insurance business volume is increasing slowly for launching new products & increasing the policyholder’s awareness and active supervision from the IDRA-Insurance Development and Regulatory Authority of Bangladesh to rebrand the insurance industry of Bangladesh.
In Bangladesh, it seems Insurance sector is a promising one. In coming years as the large number of peoples is still yet to be covered under the safety net of insurance. According to the report on BBS Report 2018 total population of Bangladesh is 162.7.
To bring all of the peoples under the safety net of insurance coverage, the need for insurance will be increased in upcoming years.
To popularize and bring more peoples under the safety net of insurance, the government of Bangladesh has taken massive initiatives to rebrand the sector by ensuing the transparency and accountability. The government of Bangladesh in a Cabinet meeting on January 15, 2020 has declared March 01 as Insurance Day.
In order to increase the overall insurance penetration in Bangladesh, end-to-end digitalization of insurance is must. Digitalization of insurance will be effective to inspire the new policyholders to purchase hassle free insurance policy and also it will increase the operational efficiency of the company. Without digitalization of insurance, it will be really difficult to reach this segment individually to the customers who are active in online platform & using mobile phones.
According to the report of BTRC published on April 2020, total number of mobile Phone subscribers has reached 162.920 million at the end of April, 2020.
Due to the rise of internet users, e-commerce business has flourished in recent years. If e-commerce can grow in Bangladesh digitalization of insurance will help to uncap the new segment of the policyholders & increase the insurance penetration of Insurance in Bangladesh.
Both insurer and policyholders will be highly benefited if insurance services are fully digitalized in Bangladesh. Few of the benefits are highlighted here:
Benefits in Insurer Side:
o It will be easy for insurer to attract &and retain new segment of customers to buy insurance policy
o Digitalization of insurance will support to reduce the operational cost of the company
o Digitalization of insurance will aid to ensure more transparency and accountability
o Digitalization of insurance will benefit the insurer to provide quality services to the clients
o Digitalization of insurance will help track the policy and see its latest condition with a click.
o Policy underwriting will be much easier and errors free
o Claim versification and settlement will be easier
o Claims payment will faster and hassle free
Benefits in Policyholders’ Side:
o Policyholders will be able to purchase insurance policy online
o Policyholders will be able to raise claims easily and get the payment
o Overall human interaction will be less compared to traditional mode of purchasing insurance policy
o Policyholders trust and satisfaction will surely be improved which will help the insurance industry to grow further.
Impact of Covid-19 and role of digitalization of insurance services:
Covid-19 has enormously affected different sectors around the globe. Likewise, the insurance industry of Bangladesh has also been affected. This pandemic situation has intensified the necessity of digital insurance services.
Therefore, it be said that in order to ensure sustainable business growth for the company, digitalization of insurance is must not only to attract the policyholders but also to reduce the operational cost and ensure competitiveness from the competitors. If insurance industry could be fully digitalized, peoples could get the benefits of insurance services like other developed countries: UK, Germany & USA.
The writer is an adjunct faculty, MBA Program, IUBAT-International University of Business Agriculture and Technology Uttara, Dhaka.
E-mail: [email protected]
