Executive Summary
The insurance sector in Bangladesh is experiencing a significant shift as the nation progresses
both economically and socially. Although there are more than 80 insurance companies
operating in the country with a long history in the industry, the level of insurance penetration
remains critically low-hovering at just 0.5% of GDP. This figure is substantially behind regional
peers like India and Vietnam. Such low penetration points to several persistent issues, including
weak regulatory implementation, low public awareness, minimal innovation, and a general lack
of trust in insurance providers.This report offers an in-depth overview of the current state of
Bangladesh's insurance industry, examining its historical development, operational challenges,
regulatory structures, and evolving market trends. It outlines major issues such as limited
consumer trust, outdated insurance products, governance shortcomings, and slow digital
transformation. At the same time, it acknowledges positive trends like the ↓ growing adoption
of digita. Cols, expansion of microinsurance programs, and a shift toward more customer-
focused product offerings.The analysis highlights the vast untapped opportunities within the
sector, especially in areas like microinsurance, climate-related risk coverage, corporate
insurance expansion, and mobile-based service delivery. It stresses the industry's potential to
foster financial inclusion, safeguard at-risk populations, and strengthen economic resilience-
particularly in response to climate change impacts and health emergencies.
To unlock this potential, the report recommends key actions: enhancing regulatory oversight,
initiating nationwide insurance awareness campaigns, encouraging digital and product
Men
innovations, and building a skilled workforce. It also emphasizes the importance of improving
reinsurance capabilities and developing strategic public-private partnerships to ensure long-
Chicken Burger
term, sustainable growth.
n
Pasta
n
Chicken Noodles
n
Chicken Fried Rice
Table of Contents
Executive Summary........................................................................................................................2
Introduction................................................................................................................................... 4
Historical Background of Insurance in Bangladesh........................................................................5
Current Status and Market Performance.......................................................................................6
Insurance and Financial Inclusion..................................................................................................7
The Role of Reinsurance and Risk Management............................................................................8
Regulatory Landscape and Institutional Reform............................................................................9
Insurance Education and Workforce Development......................................................................11
Climate Change and Catastrophic Risk Coverage.........................................................................12
Customer-Centric Innovations and Product Design.....................................................................13
Problems and Challenges in the Insurance Sector.......................................................................14
Prospects for Growth and Sectoral Potential...............................................................................16
Recommendations....................................................................................................................... 18
Conclusion................................................................................................................................... 21
References................................................................................................................................... 22
Introduction
The insurance sector in Bangladesh remains underdeveloped despite decades of operation and
recent regulatory reforms. With only 0.5% insurance penetration relative to GDP, the industry
lags far behind its South Asian peers. Public distrust, weak institutional capacity, low awareness,
and limited product innovation continue to hinder growth. However, the sector also holds
untapped potential due to rising incomes, increased digital access, and the growing need for
financial protection.
This report explores the historical evolution of insurance in Bangladesh and assesses its current
market performance. It examines key issues such as financial inclusion, reinsurance capacity,
workforce readiness, regulatory shortcomings, and exposure to climate-related risks. In
addition, the study highlights emerging trends in customer-centric design and digital innovation.
The report concludes with a forward-looking analysis of sectoral prospects and practical
recommendations for reform. Together, these insights aim to inform policymakers, industry
stakeholders, and academic readers interested in the future of Bangladesh’s insurance industry.
Historical Background of Insurance in Bangladesh
The history of insurance in Bangladesh can be traced back to the pre-independence era, during
which insurance activities were conducted under British colonial administration and later under
Pakistan. After the liberation of Bangladesh in 1971, the insurance industry was nationalized in
an effort to regulate financial institutions and ensure stability. Two major corporations were
established by the government—Sadharan Bima Corporation for general insurance and Jiban
Bima Corporation for life insurance. These state-owned entities held a monopoly on the
insurance market for several years and were tasked with providing basic insurance services to
the population, albeit with limited resources and capabilities (Syed, 2015).
Over the next few decades, the government gradually opened the sector to private
participation. In the 1980s and 1990s, private insurance companies began entering the market,
bringing with them a diversity of products and more competitive practices. This liberalization
spurred modest growth in the sector, although public corporations continued to dominate a
large share of the business. The Insurance Act of 2010 and the formation of the Insurance
Development and Regulatory Authority (IDRA) were significant milestones aimed at
strengthening governance, improving transparency, and encouraging innovation in the sector.
These legal and institutional reforms laid the groundwork for broader sectoral transformation,
even if their implementation has been uneven (World Trade Organization, 2013).
Today, while there are over 80 insurance companies in operation, the market is still
characterized by uneven growth, a heavy reliance on traditional products, and a lack of
innovation in risk coverage and customer engagement. Nonetheless, the historical evolution of
the sector reveals a shift from a state-controlled monopoly to a mixed market striving for
modernization and inclusivity.
Current Status and Market Performance
As of 2024, Bangladesh’s insurance industry remains small in both absolute and relative terms.
The sector contributes only about 0.5% to the country’s GDP, a figure that has remained largely
stagnant over the last decade. In contrast, global insurance penetration averages above 6%, and
emerging economies in Asia have generally surpassed 3–4%. According to data from the
Bangladesh Insurance Association and the IDRA, the total gross premiums collected in 2023
amounted to roughly BDT 16,000 crore (USD 1.45 billion), which represented a modest year-on-
year growth of 7.3%. This rate is significantly lower than what would be expected in a country
with a rapidly growing economy and expanding urban middle class (Paul, 2024).
The life insurance segment is dominated by a few players, with MetLife Bangladesh being a
market leader. In the general insurance category, Green Delta Insurance and Pioneer Insurance
are among the most recognized names. The sector has also seen the entry of Islami insurance
providers and microinsurance ventures aimed at reaching rural and underserved populations.
However, despite the increasing number of players, market competition remains constrained by
legacy practices, weak corporate governance, and poor brand differentiation. As a result,
policyholders often experience similar products and pricing across the board, which discourages
consumer engagement and innovation (ICAB, 2019).
Operationally, the sector is plagued by inefficiencies. Manual recordkeeping, slow claim
processing, and a lack of digital transformation hinder scalability and customer satisfaction.
Many insurance companies still rely on outdated business processes, which not only limit their
ability to serve clients efficiently but also expose them to risks of fraud, data loss, and non-
compliance with international standards. On the consumer side, skepticism toward insurance as
a financial tool persists, fueled by past experiences of delayed or denied claims, opaque terms,
and poor after-sales service. This negative perception creates a vicious cycle of low demand and
limited innovation, thereby stalling the industry’s development.
Insurance and Financial Inclusion
One of the most compelling arguments for the development of the insurance industry in
Bangladesh is its potential role in promoting financial inclusion. Financial inclusion refers to the
access and use of affordable financial products and services by all segments of society,
especially the underserved and vulnerable populations. In a country where a large portion of
the population is still unbanked or underbanked, insurance can play a vital role in providing a
safety net and promoting long-term financial resilience (Islam, 2019).
When properly designed and implemented, insurance products can protect low-income families
from financial shocks caused by illness, natural disasters, or loss of income. For example,
agricultural insurance can shield farmers from crop failures due to floods or drought, while
health microinsurance can prevent medical emergencies from pushing households into poverty.
These instruments not only improve individual welfare but also reduce the economic burden on
government welfare systems and humanitarian aid.
For insurance to be an effective tool for financial inclusion in Bangladesh, there must be greater
collaboration between the government, private sector, and development agencies. Regulatory
frameworks need to support innovation in inclusive insurance products, while digital
technologies can be leveraged to improve distribution and reduce administrative costs. Financial
education programs tailored to the needs and contexts of different communities will also be
essential in building awareness and trust.
The Role of Reinsurance and Risk Management
Reinsurance, often referred to as insurance for insurers, is a critical aspect of managing risk
within the insurance industry. In Bangladesh, the state-owned Sadharan Bima Corporation
currently holds the mandate for domestic reinsurance. However, the local reinsurance capacity
remains limited, and many insurance companies depend on international reinsurance providers
for comprehensive coverage of large or specialized risks.
Effective reinsurance arrangements are essential to ensuring the solvency and stability of
primary insurers, especially during times of catastrophic loss such as natural disasters. Given
Bangladesh’s vulnerability to cyclones, floods, and other climate-related events, strengthening
reinsurance capabilities should be a national priority. This may involve upgrading the technical
expertise of Sadharan Bima Corporation, inviting international reinsurers into the market, or
forming regional risk-sharing pools (ICAB, 2025).
Moreover, adopting sound risk management practices at the company level is equally crucial.
Insurers in Bangladesh must develop robust internal systems to evaluate policy risks, price them
accurately, and hold adequate reserves. Investments in actuarial science, predictive analytics,
and risk-based capital models can help companies become more resilient and trustworthy.
Without a strong foundation in risk management, the industry will remain exposed to solvency
risks, which ultimately undermine consumer confidence and the sustainability of the sector.
Regulatory Landscape and Institutional Reform
Regulation plays a crucial role in the development and integrity of any financial sector, and
insurance is no exception. In Bangladesh, the Insurance Development and Regulatory Authority
(IDRA) is the primary body responsible for licensing, monitoring, and supervising all insurance
entities. Established under the Insurance Act of 2010, IDRA was envisioned as a modern
regulator with the mandate to foster a healthy insurance market, protect policyholder interests,
and enforce compliance with international standards. Over the years, IDRA has taken several
important steps in reforming the sector, but its effectiveness remains limited due to various
structural and operational challenges (Islam, 2019).
Despite its wide-ranging powers, IDRA’s effectiveness has been constrained by several factors.
For one, the regulatory framework still lacks clarity in certain areas. Many rules and guidelines
remain outdated, inherited from a legacy of state control and bureaucratic inertia. Moreover,
IDRA itself faces capacity issues, including limited staffing, lack of digital infrastructure, and a
shortage of professionals with specialized knowledge of actuarial science, insurance law, and
risk analytics. These limitations hinder IDRA’s ability to conduct effective supervision, perform
risk-based evaluations, and provide timely intervention in cases of malpractice or financial
instability.
However, there have been noteworthy reforms in recent years. One such initiative is the push
towards digital claim settlement and e-policy issuance, aimed at increasing transparency and
reducing fraud. IDRA has also introduced a risk-based capital requirement system, moving away
from a fixed capital approach. This aligns more closely with international best practices and
encourages insurers to manage their portfolios more prudently. Furthermore, corporate
governance norms have been tightened, with requirements for independent directors, audit
committees, and periodic financial reporting becoming more stringent.
Despite these efforts, implementation remains inconsistent. Smaller firms often lack the
capacity or willingness to comply with new rules, and enforcement mechanisms are still
relatively weak. There is also a lack of effective collaboration between IDRA and other financial
regulators like the Bangladesh Bank and the Securities and Exchange Commission. This
fragmented oversight limits the development of holistic financial solutions, such as
bancassurance, which require coordination across multiple sectors. Until such regulatory
coordination is achieved, the insurance industry will struggle to reach its full potential.
Insurance Education and Workforce Development
One of the less frequently discussed but critically important issues facing the insurance industry
in Bangladesh is the lack of professional education and workforce development. Unlike other
financial sectors such as banking or capital markets, insurance has not received proportional
attention from academia or vocational training institutes. As a result, the industry suffers from a
chronic shortage of skilled professionals, including underwriters, actuaries, claims assessors, risk
managers, and insurance advisors. This shortage not only affects operational efficiency but also
limits the sector's capacity to innovate and respond to emerging risks (Paul, 2024).
Most employees in the sector acquire knowledge through on-the-job experience rather than
formal instruction, which limits the scope of innovation and impedes the adoption of best
practices. Additionally, there is limited availability of continuing education programs or
professional certifications specifically tailored for the insurance profession. This gap in human
capital development is especially problematic given the increasing complexity of insurance
products and the rapid evolution of technology in the financial sector.
To build a future-ready workforce, Bangladesh needs to invest in structured educational
pathways for insurance and risk management. Universities could collaborate with industry
associations to offer specialized degree programs, while regulatory bodies like IDRA might
sponsor certification courses and training workshops. Such initiatives would not only improve
service quality and efficiency but also enhance the reputation and attractiveness of the
insurance profession among young graduates.
Climate Change and Catastrophic Risk Coverage
As a country prone to natural disasters, Bangladesh faces unique challenges in managing
climate-related risks. Floods, cyclones, and riverbank erosion frequently displace communities,
destroy property, and severely disrupt economic activities. These disasters also pose a
significant threat to the sustainability of the insurance sector, particularly in the absence of
comprehensive catastrophe risk coverage.
The current insurance offerings in Bangladesh are not adequately designed to handle large-scale
climate events. Coverage limits are often low, exclusions are poorly communicated, and
reinsurance mechanisms are insufficient to absorb the financial impact of widespread loss.
Furthermore, many affected populations do not have any insurance at all, either because
products are not available in their region or because they cannot afford premiums.
In this context, there is an urgent need for climate-responsive insurance products, such as
weather-indexed crop insurance, disaster microinsurance, and parametric policies that pay out
automatically when certain thresholds are met. Public-private partnerships could play a critical
role in designing and distributing these products, especially in vulnerable coastal and flood-
prone areas. Donor agencies and multilateral development banks can also contribute technical
expertise and funding support to scale up innovative risk-transfer solutions that enhance
resilience and recovery.
Customer-Centric Innovations and Product Design
Traditional insurance models in Bangladesh often fail to meet the diverse and evolving needs of
the customer base. Standardized product offerings, rigid policy conditions, and poor customer
service contribute to low engagement and retention rates. For the industry to grow, insurers
must shift toward a more customer-centric approach that focuses on flexibility, personalization,
and user experience.
Modern consumers, especially younger policyholders, expect digital access, simplified
processes, and transparent terms. Many are looking for hybrid insurance products that combine
protection with savings or health benefits. Additionally, there is increasing demand for short-
term or on-demand insurance—such as travel or gadget insurance—that can be purchased
instantly through mobile apps or online platforms.
In response, a few forward-thinking insurers in Bangladesh have begun experimenting with
user-friendly mobile platforms, flexible premium options, and modular policy structures.
However, these innovations are still the exception rather than the rule. Industry-wide adoption
of design thinking, behavioral analytics, and customer feedback loops will be essential to
building trust and long-term relationships. By prioritizing the needs and preferences of
customers, insurers can unlock new markets and create more resilient business models.
Problems and Challenges in the Insurance Sector
The problems facing the insurance sector in Bangladesh are multifaceted and deeply rooted in
both historical legacies and current institutional weaknesses. One of the most pressing
challenges is the alarmingly low penetration rate of insurance services among the population.
Despite an increasing literacy rate and greater access to information, most people in Bangladesh
still do not understand how insurance works, nor do they see it as a reliable financial product.
This lack of awareness is not limited to rural or low-income communities; even among urban,
educated individuals, there exists a widespread skepticism about the value of insurance. The
absence of a well-structured public education initiative on financial literacy further exacerbates
this problem, leaving most people to rely on anecdotal experiences, which are often negative.
Another major problem is the absence of trust between consumers and insurers. Over the
years, several insurance companies have gained a reputation for poor customer service,
particularly when it comes to processing claims. Delayed payments, arbitrary claim denials, and
non-transparent policy conditions have severely eroded the confidence of the general public. In
rural areas, where people often rely on informal lending and community support, the concept
of risk pooling and future security through insurance is difficult to grasp and even harder to
trust. This trust deficit is perhaps the biggest barrier to broader adoption of insurance in the
country.
Regulatory oversight, while improving, is still far from effective. The Insurance Development and
Regulatory Authority (IDRA) has introduced important reforms, such as raising capital adequacy
standards and requiring financial disclosures, but enforcement remains inconsistent. Smaller
insurance firms frequently avoid compliance, and penalties are rarely enforced in a meaningful
way. This results in a market where weak players survive despite inefficiency and
mismanagement, dragging down the sector as a whole. Moreover, because of limited
coordination with other financial regulators, there is often overlap or confusion in regulatory
jurisdiction, which creates loopholes that can be exploited by dishonest actors.
Additionally, the insurance industry faces a talent deficit. There is a shortage of actuaries, risk
managers, claims adjusters, and digitally skilled personnel. Many employees in the industry lack
formal training in modern insurance practices and rely instead on legacy methods of
underwriting and client management. Educational institutions in Bangladesh have only recently
begun offering programs related to insurance and risk management, and industry-academia
collaboration remains limited. This lack of professional capacity undermines the sector’s ability
to design innovative products, manage risk effectively, and serve customers efficiently.
Corruption and governance failures further complicate the landscape. In recent years,
numerous scandals involving the misappropriation of policyholder funds, fictitious claims, and
insider dealings have emerged. These incidents not only harm the individual companies
involved but also damage the credibility of the entire sector. In the absence of a well-
functioning insurance ombudsman or arbitration system, aggrieved customers have few options
for recourse, which perpetuates feelings of helplessness and reinforces negative perceptions of
the industry.
Prospects for Growth and Sectoral Potential
Despite the many challenges that the insurance industry in Bangladesh faces, the sector holds
considerable promise for growth and development. One of the most significant drivers of this
potential is the country’s favorable demographic profile. With a young population and a growing
urban middle class, Bangladesh presents an ideal environment for long-term insurance market
expansion. Rising incomes, increased financial literacy, and improved access to banking and
mobile services are contributing to a more insurance-aware customer base. As people begin to
prioritize financial planning, protection, and health, the demand for diverse and responsive
insurance products is expected to rise.
Another important growth driver is the increasing need for insurance products tailored to
specific market segments. For example, as urbanization continues, property insurance will
become more relevant for households and businesses alike. Similarly, rising rates of non-
communicable diseases and healthcare inflation are pushing demand for health and critical
illness coverage. Customizing products to meet these evolving needs, especially in the middle-
and lower-income brackets, can significantly broaden the client base and deepen market
penetration.
Microinsurance also holds immense untapped potential. Designed to serve low-income
populations who are traditionally excluded from mainstream financial services, microinsurance
products can address the basic risk protection needs of millions. Some insurers have already
introduced microinsurance schemes targeting rural farmers, small traders, and informal
workers. With the right partnerships—especially with NGOs, microfinance institutions, and
mobile operators—these products can be distributed at scale, reducing administrative costs
while maximizing outreach. If these schemes are supported by robust awareness campaigns and
clear benefit structures, they can help foster a culture of insurance from the ground up.
There is also substantial room for growth in the corporate insurance market. As Bangladesh's
business sector diversifies and internationalizes, demand for commercial insurance—including
liability, marine, fire, and business interruption coverage—is on the rise. Local insurers must
upgrade their technical capabilities and product offerings to compete with international
standards and attract large clients. This includes building expertise in actuarial modeling,
reinsurance, and risk-based pricing.
Finally, favorable government policy and regulatory reform will be essential in unlocking the
sector’s full potential. Tax incentives for policyholders, mandatory insurance requirements for
certain sectors, and investment in digital infrastructure can all serve as catalysts. If the
regulatory environment becomes more business-friendly and efficient, it will attract foreign
investors and foster innovation. This synergy between private initiative and public oversight is
crucial for the sustained development of a dynamic insurance industry in Bangladesh.
Recommendations
To unlock the full potential of the insurance industry in Bangladesh, a coordinated, multi-
dimensional approach is required. The following recommendations aim to address the core
structural, operational, and regulatory issues while paving the way for long-term, inclusive, and
sustainable growth.
1. Strengthen Regulatory Enforcement and Transparency
The Insurance Development and Regulatory Authority (IDRA) must enhance its supervisory and
enforcement capacity. This includes real-time digital monitoring of insurance company finances,
stricter compliance checks, and meaningful penalties for fraudulent practices. Regulatory
reforms should also focus on simplifying product approval processes, publishing regular industry
performance data, and making claim settlement timelines enforceable by law to build consumer
trust.
2. Promote Insurance Awareness and Literacy Campaigns
A major bottleneck in insurance penetration is the widespread lack of understanding and
confidence in insurance products. Government agencies, industry associations, and non-
governmental organizations should collaborate on nationwide financial literacy campaigns.
These efforts should be tailored to rural populations, informal workers, and low-income groups,
using local languages, storytelling, and culturally relevant media to improve awareness and
reduce misconceptions.
3. Expand and Incentivize Microinsurance
Microinsurance can serve as a powerful tool for social protection and financial inclusion. The
government should provide regulatory incentives—such as tax breaks or co-financing—for
companies that offer affordable, accessible microinsurance products. Partnerships with
microfinance institutions, NGOs, and mobile money providers should be institutionalized to
increase outreach and policy distribution in remote and underserved regions.
4. Integrate Technology Across the Value Chain
Insurance companies must embrace end-to-end digital transformation. From automated
underwriting and mobile-based policy issuance to AI-powered fraud detection and chatbot-
driven customer service, digital tools can enhance efficiency, reduce costs, and improve
customer experience. The government can support this through public infrastructure (e.g.,
national digital ID access) and subsidies for digital upgrades in small and mid-sized firms.
5. Develop Human Capital and Professional Training
The insurance sector urgently needs a qualified, future-ready workforce. Academic institutions
should introduce degree programs in insurance, actuarial science, and risk management. IDRA
and industry associations can launch mandatory certification programs for agents and
managers. Scholarships and internships for students in relevant fields will help bridge the talent
gap and elevate industry standards.
6. Improve Reinsurance Infrastructure and Catastrophe Preparedness
Bangladesh should enhance its domestic reinsurance capacity and explore regional risk pooling
mechanisms. Sadharan Bima Corporation must modernize and become more technically
proficient to handle large-scale and climate-related risks. The government should also
collaborate with international reinsurance partners to build early-warning systems and develop
parametric products that trigger payouts during natural disasters.
7. Encourage Customer-Centric Product Design
Insurers should conduct market research to better understand the needs and pain points of
customers. Products should be modular, flexible, and easy to understand, especially for first-
time policyholders. Offering bundled policies (e.g., life + health), loyalty incentives, and family
plans can attract a broader customer base. Clear communication and hassle-free claims should
be at the center of product strategy.
8. Foster Public-Private Collaboration and Policy Innovation
Bangladesh's insurance future depends on synergy between public policy and private
innovation. The government can introduce mandatory insurance for certain sectors (e.g.,
transport, agriculture, export industries) while also enabling sandbox environments for private
firms to test new products. Establishing a national insurance strategy under a dedicated public-
private task force would provide coherence and strategic direction.
Conclusion
The insurance industry in Bangladesh is marked by a paradox: it is both essential and
overlooked. Despite a critical need for risk protection in a disaster-prone and economically
evolving country, insurance remains underutilized and mistrusted. This report has examined the
sector’s history, current status, regulatory framework, workforce gaps, and pressing challenges
such as low penetration and limited reinsurance capacity. It also explored promising
opportunities in microinsurance, climate risk coverage, customer-centric innovation, and digital
integration. For the sector to grow and contribute meaningfully to national development,
coordinated efforts are needed—spanning public policy, private innovation, and institutional
reform. Strengthening regulation, investing in education, designing inclusive products, and
building digital infrastructure will be key. With the right vision and implementation,
Bangladesh’s insurance industry can evolve into a robust pillar of social protection and
economic resilience.
References
ICAB (2019). ICAB Publication. [online] www.icab.org.bd. Available at:
https://www.icab.org.bd/publication/news/4/920/Overview-of-Insurance-Industry-in-
Bangladesh.
ICAB (2025). ICAB Publication. [online] Icab.org.bd. Available at:
https://www.icab.org.bd/publication/news/4/1697/A-Comparative-Analysis-of-
Insurance-Sector-in-Bangladesh:-Growth [Accessed 27 May 2025].
Islam, N. (2019). Potential for growth: Transforming Bangladesh’s insurance sector Potential for
growth: Transforming Bangladesh’s insurance sector. [online] Available at:
https://www.pwc.com/bd/en/assets/pdfs/research-insights/2019/potential-for-
growth.pdf.
Paul, P. (2024). Bangladesh’s Insurance Landscape: Progress and Prospects. [online] The Daily
Star. Available at: https://www.thedailystar.net/supplements/national-insurance-day-
2024/news/bangladeshs-insurance-landscape-progress-and-prospects-3556131.
Syed (2015). Bangladesh Financial Sector. Asian Development Bank.
World Trade Organization (2013). Insurance Policy Review Bangladesh 2012. Bernan Press.
