The insurance sector's income growth from premium hit an eight-year high last year thanks to heightened efforts by insurers to revive lapsed insurance policies.

The insurance premium is the upfront cost of obtaining insurance coverage over a defined period. It represents both an income and liability for the insurer in that it must provide coverage for claims being made against the policy.

In 2018, the insurance industry's gross premium income stood at Tk 12,438 crore, up 11.25 percent year-on-year, according to data from the Insurance Development and Regulatory Authority (IDRA). 

The last time a higher premium income growth was seen was back in 2010: of 18.59 percent. After that, it stayed within single digits.

“Gross premium growth increased as insurers put in effort in reviving lapsed insurance policies,” said Gokul Chand Das, member of IDRA.

The jump in premium income growth, however, is not indicative of the sector's performance last year: they could not rope in new clients at the same rate.

In 2018, new business growth of life insurance was 9.16 percent, down from 16 percent registered a year earlier. For non-life insurance, it was 11.70 percent, up from 11.11 percent logged in for 2017.

“New business growth for both life and non-life insurance was lacklustre because of the lack of trust on the sector among the general public,” Das added.

The low claim settlement rate is the major problem with the sector, according to industry insiders.

The claim settlement rate of non-life insurance sector declined to 32.60 percent last year from 35.75 percent the previous year.

However, in case of life insurance the settlement rate increased to 85.83 percent from 82.89 percent. 

Excessive discounts on premium being offered to clients to get them on board are a major barrier to the growth of the insurance sector, said Mohammodi Khanam, chief executive officer of Prime Insurance.

As per rules, general insurance companies are allowed to spend 15 percent of their premium income to attract new clients.

But some of the insurance companies are offering unusual amounts to clients -- violating the 15 percent ceiling.

“As a result, the other insurance companies are struggling to get business by offering logical amounts of discounts.”

Subsequently, Khanam urged the regulatory body to crack down on the practice.

The insurance industry is badly suffering from lack of competent manpower, said Dipen Kumar Saha Roy, chief executive officer of Progressive Life Insurance.

People without the right qualifications are coming to the sector. As a result, they cannot fully grasp the technicalities of the products and are unable to make a convincing sales pitch, he added. The top life insurance companies are: MetLife, Fareast, National, Popular, Delta, Jiban Bima Corporation, Meghna, Prime, Pragati and Rupali.

The top non-life insurance companies are: Green Delta, Sadharan Bima Corporation, Pioneer, Reliance, Pragati, Eastland, Rupali, Phoenix, Nitol and Bangladesh General Insurance Company.