Bangladesh is a densely populated country in the world and majority of the people lives below the poverty line.There are some hindrance or obstacle to develop the insurance business in Bangladesh .
Hindrance of insurance business
Important barriers or hindrance are given bellow:
- Monthly Low Income : Substandard financial condition is considered to be the main reason for poor insurance business.Incapability to save or insufficient savings by a greater part of population in Bangladesh kept them away from the insurance.
- Lack of knowledge of agents : In Bangladesh educated young people are seemed to be uninterested to become insurance agents.So, the persons finding no job or persons having less knowledge become insurance agents.Such insurance agents cannot express themselves fully with the insurance for better service and cannot play effective & efficient role in convincing the expected/probable policyholder.
The insurance marketing is badly hampered in the village of Bangladesh because insurance agents did not convey the real benefits of insurance to the village people.
- Illiteracy/Lack of education : Mass illiteracy is an important reason that adversely affects the insurance marketing in Bangladesh.About 70% of the people in Bangladesh are floating in the sea of ignorance.Illiterate persons think that the insurance is deception; it has no value in life.They cannot think rationality because they do not know what is insurance and what its importance as security for future.
- Religious fundamentalism : Religious sentiment of the people also stands against productive insurance.The religious people believe that the future is uncertain, it is in the hand of God/Allah and they do not think it necessary to purchase insurance policy for them.
- Lack of Insurance awareness : Insurance awareness of the Bangladeshi people is very weak .Beside this, insurance agents are not skilled enough for marketing insurance properly.These agents cannot execute their job rightly to make the people familiar with life insurance.
- Tiny savings : People of Bangladesh have a very little saving potentially and thus they have no disposable income for additional expense.Almost the whole income is exhausted in the process of maintaining the regular life.Thus they have a tiny amount, which may not deemed to sufficient for the payment of insurance premiums.This factor disappointed many to purchase a life insurance policy.
- Discontinuity of Policy : Discontinuation of insurance policies is found higher.This also adversely affects the market efficiency of insurance business.
- Shortage of fund : Most of the policyholders discontinuing their policies owing to prices spiral and shortage of fund.
- Lack of remainder notice : Lack of remainder : Increase in liability, lack of remainder notice from the insurance company causes for discontinuation of policy.
- Negligence of policy holders : Many of the policyholders have expressed that their policies lapsed for their own negligence to pay premium in time.Most of the policy was lapsed by the negligence of policy owner to pay premium in time.
- Investment limitation : Another important reason for discontinuation is limitation of investment allowance by the government relating to income tax.
- Low quality of services to policyholder : An important reason for the dismal performance of insurance business in Bangladesh is low quality client services provided by the insurance companies.In Bangladesh insurance company provided a poor policyholder service after sell a policy.It is an important reason for the dismal performance of insurance business.
- Image of insurance : High lapses of life insurance policies do much to harm insurance image.
- Red tapism to get claim amount : When an accident occur, a claimant faces many difficulties to obtain claim amount from the insurance company.This also disappointed people for being a policyholder.
- lack of new insurance policy/product : In insurance market one can expect to see new product coming out very now and then.But still today one can hardly see any new product in the insurance market in Bangladesh.
How to overcome from hindrance or barriers
There is no alternative to provide quality of service.Insurance being a service rendering entity must deliver quick services.Insurance prospect in Bangladesh is very high if the following measures can be implemented:
Provide Quality of services
Policyholders are highly disappointed with service of insurance company of Bangladesh.Due to very low quality services, insurance companies are loosing market.To ensure the continuation of a policy, such insurance company must pay adequate attention on their quality of services.Insurance companies also need put all out efforts to upgrade quality of service for strengthen their position
Promotion of Insurance
Bangladesh is a populous country and most of the people in our country are poor.There should be powerful campaign through out the country to make the people aware of the benefits and prospects of buying insurance. Insurance awareness in Bangladesh is very poor.
Agents of Insurance are not skilled enough.These agents cannot perform their job properly to make the people aware of insurance.If peoples are known about the importance of insurance they would obviously go for insurance for the security and the risks covered by the insurance.
Settlement of Claim
The policy owner are very much worried about the settlement of claims.Ordinary people in society also consider it main obligation.So, instance companies should settle the claims as soon as possible to create a healthy public image.For this purpose the procedure of claim settlement can be simplified and the insurance company can provide precise written guidelines of claim settlement to the policyholders.
Educated young people of Bangladesh are seemed to be uninterested to become a insurance agents or marketing officials.Therefore, the persons who finding no job or persons having less knowledge become insurance agents whom cannot express themselves fully with the insurance environment.Such agents cannot play effective & efficient role in convincing a expected policyholder.
The insurance marketing is badly hampered in the village of Bangladesh because they did not convey the real benefits of insurance to the village people.
Illiteracy/Lack of education
Mass illiteracy is an significant reason that adversely impacts the insurance marketing .About 70% of the people in Bangladesh are floating in the sea of ignorance.Illiterate persons think that the insurance is cheating; it has no value in life.They cannot think logically because they do not know what is insurance and what its importance as financial security for future life.