Insuretech must be institutionalised for the sake of bringing about a much-needed tech-driven shift in the country's insurance sector and thus helping the industry grow to its potential by easing all kinds of service delivery, experts said at a discussion yesterday.
To this end, the role of the institutions involved with Insuretech needs to be strengthened, they added at the round table on the potential of Insuretech in the economic development of Bangladesh, organised by the Bangladesh Association of Software and Information Services (BASIS).
Insuretech refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance industry model. Insuretech is made up of the words "insurance" and "technology," and is inspired by the term Fintech. Research suggests that traditional insurers, going forward, will own only the sources of competitive advantages such as underwriting and claims. The rest of the value chain will increasingly depend on trusted Insuretechs.
At Wednesday's roundtable, Masud Rana, additional director of the Bangladesh Bank, said the Insurance Development and Regulatory Authority should make necessary amendments to its policy so that insurance and technology companies can work together to develop and expand new insurance products in coordination with the technologies of the 4th Industrial Revolution.
The implementation of Insuretech would help strengthen accountability and reliability and bring down all kinds of expenses in the insurance sector, he observed.
An analysis of the relevant data shows that the insurance sector's contribution to Bangladesh's gross domestic product (GDP) is only 0.4%, which is 4.2% in neighbouring India, 1.2% in Sri Lanka. On the other hand, the contribution of the insurance sector to the GDP of Malaysia, China, and the United Kingdom is 5.4%, 4.5%, and 3.1%, respectively.
As per the data by India's government export promotion agency, the India Brand Equity Foundation, currently over 110 Insuretech startups are operating in India. The funding trend continued with Turtlemint raising $30 million in November 2020 and Digit raising around $84 million at the start of 2021.
What is more, around 40 Insuretech and insurance companies have raised funding in Pakistan, while more than 335 Insuretech companies are operating in the Asia-Pacific region.
In Bangladesh, there are around 10 companies that are working with insurance companies to provide insurance solutions by digital means or enabling insurance through information technology.
Fahim Mashroor, chairman of BASIS Standing Committee on Fintech and Digital Payment, said, "Giving Insuretech an institutionalised form will play a pivotal role in ensuring the growth of the insurance industry and in providing better customer service, and properly coordinating and redesigning insurance policies."
The roundtable was also addressed, among others, by Ehsanul Kabir, joint director of the Bangladesh Bank, Rafiqur Rahman, deputy managing director of the PICL, Md Rafel Kabir, managing director of Instasure, Alvi Nizam, managing director of Bimafy. It was moderated by Fida Haq, co-chairman of the BASIS fintech standing committee.