Banks To Begin Insurance Sales

The bancassurance system which as a business model of selling insurance products through banking channels, will begin on Sunday as Prime Minister Sheikh Hasina announced it formally on Friday while opening the National Insurance Day.

Local commercial banks -- City Bank PLC, BRAC Bank PLC, Standard Chartered Bank, Eastern Bank Limited (EBL) and Dutch-Bangla Bank PLC -- will start marketing from the day, according to the Insurance Development and Regulatory Authority (IDRA). Earlier, the IDRA issued corporate agent licences against the five commercial banks.

Multinational life insurer MetLife Bangladesh signed agreements with three commercial banks -- BRAC Bank, Standard Chartered Bank and EBL. City Bank inked a deal with Guardian Life, while the DBBL will work as a corporate agent of Guardian Life and Pragati Life.

Mr Ashanur Rahman, chief economist and country business manager of City Bank PLC, told The Financial Express that they would start selling policies from Sunday. "We will start selling insurance products from Sunday as we have planned much earlier," Mr Rahmna said. The bank will sell four insurance products of the Guardian Life.

He also said they are talking to two more life insurers to ink agreements for bancassurance. A bank can work as a corporate agent of three insurers as per the guidelines.

Such partnership business is believed to enhance non-traditional revenues for banks. The traditional selling of insurance products is usually made through insurers' agents who also get commissions set by the insurance regulator IDRA. Once the bancassurance is rolled out, such agents will also continue the typical sale.

Bangladesh has now 82 life and non-life insurers, including two public ones. The country has 61 commercial banks currently in operation. The insurance penetration in terms of GDP is less than 0.5 per cent.