The Microinsurance Market in Bangladesh: An Analytical Overview

Syed Ahsan (), M. A. Baqui Khalily, Syed A. Hamid, Shubhasish Barua and Suborna Barua
Additional contact information
M. A. Baqui Khalily: Institute of MIcrofinance (InM),
Syed A. Hamid: Dhaka University and InM
Shubhasish Barua: Dhaka University and University of Warwick,

Bangladesh Development Studies, 2013, vol. 36, issue 1, 1-54

Abstract: This paper provides an analytical overview of the current state of the microinsurance market in Bangladesh comprising of products offered by commercial insurance companies, microfinance institutions (MFIs) and those by INAFI’s MIME programme. For the commercial life insurers, available products are characterised by a mix of inadequate risk coverage, excessively high premium rates unrelated to any plausible model of mortality of the insured, lengthy process of claim settlement and, above all, high costs of intermediation. Such products therefore appear unattractive to the vulnerable. The MFIs, on the other hand, mainly offer loan insurance thus minimising lenders’ risks and having a much quicker claim settlement process. Some MFIs also offer a variety of other products (notably, term life, health and livestock insurance). However, the health plans reviewed in the paper clarify that most of these are not examples of true insurance products since the bulk of the risk eventually remains with the insured. The requirement of cash transactions in each step of the way is a further drawback eroding popularity of the products. Finally, it is seen that, while INAFI has been implementing both term and endowment life policies, the premium structure appears rather steep vis-à-vis the cost of risks, presumably reflecting high costs of intermediation. In view of very limited competition in the market for commercial life coverage, regulatory directives may be targeted at improving competition in each segment of the market, thereby fostering innovation and fair play.

Keywords: Microinsurance; Term and Endowment Policies; Costs of Intermediation; Mortality Risks (search for similar items in EconPapers)
JEL-codes: G21 G22 G28 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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