Non-life insurers can now collect premium thru MFS
Non-life insurance companies in Bangladesh have been allowed to collect premiums through mobile financial service (MFS) providers, as the Insurance Development and Regulatory Authority (Idra) looks to enhance the industry's use of modern technologies alongside customer convenience.
Life insurance companies have been using MFS for nearly a decade to collect premiums, which is money paid by individuals or businesses in a lump sum or regularly in exchange for insurance coverage.
One life insurance policyholder, requesting anonymity, said he had started paying premiums through MFS when the pandemic arose.
"Previously, I had to go to a branch of the insurance company to deposit the premium. It used to take time and cost money. Now, I can do it instantly on my mobile phone," he said.
"Even though the pandemic is almost over, I still carry out the transaction digitally," added the policyholder who is employed in a private company and a resident of the capital's Mirpur.
However, in a December 2020 circular, Idra had barred non-life insurance companies from using MFS to collect premiums, citing that it was "to ensure discipline regarding matters pertaining to agent commissions".
Earlier it was not possible to keep track of detailed information of premiums being paid though MFS, said Sheikh Kabir Hossain, president of Bangladesh Insurance Association, a forum of private insurers.
So Idra brought about some provisions and introduced the service for non-life insurers, he said.
The introduction was informed through another circular on Sunday. In it, Idra stipulated that a non-life insurer can use a maximum of 10 corporate SIMs registered in its name alongside with the insurance regulator to collect premiums.
Once paid, premiums must be transferred to any of three designated bank accounts of the company within two working days and the company will be held liable for non-compliance.
The company will be able to withdraw the premiums solely through its bank accounts while refunds to customers can be made either through bank drafts or pay orders.
A premium can be accepted only after relevant information, such as of the insurance policy concerned, is sent to Idra's unified messaging platform.
Launched in 2019, the unified messaging platform aims to connect customers and insurers, increase accountability, provide regular premium-related information to customers and create a customer database.
According to Idra, the insurance sector collected around Tk 16,812 crore in premiums in 2022, up nearly 17 percent year-on-year even amidst the pandemic and Russia-Ukraine war.
Life insurance drew Tk 11,399 crore and non-life the rest.
Currently premiums of more than 30 life insurance companies are paid through bKash, said its head of corporate communications, Shamsuddin Haider Dalim.
This facility will simplify accessing insurance products, increasing insurance penetration, he said.
Nagad is connected to a similar number of insurance companies, according to its head of public communications, Muhammad Zahidul Islam. Customer interest is growing, with premiums collected up until this year being more than double that last year, he said.
There are now 35 life insurance and 46 non-life insurance companies active in the country. Of them, 49 are listed with the stock market.