Effort on to issue insurance policy thru scheduled banks
As subscribers have no confidence in the country's insurance companies, an initiative has been taken to issue insurance policies through the scheduled banks.
Although most of the scheduled banks are already issuing such insurance policies for its clients while disbursing loans, the government is planning to make it mandatory.
Under the new mechanism, the scheduled banks will be responsible for the policies. The clients will get their insurance benefits from the banks that issued the policies, in case of necessity, according to the Bangladesh Bank sources.
The sources claimed to make 'Bank-Insurance' mandatory, the Bangladesh Bank and the Insurance Development and Regulatory Authority (IDRA), the regulatory body for the insurance companies, have been working together.
The two authorities have already held a meeting to finalise the procedures and terms of references (ToR) to be included for ensuring the facilities. Once the procedures and ToRs are finalised through further meetings, the two authorities would sign an agreement in this regard.
The BB sources claimed that following the proposal of the IRDA, the Bangladesh Bank has taken the steps to include the scheduled banks in the insurance issuing scheme. The central bank has got huge response in this regard from the private scheduled banks.
The banks, which have expressed their interests, are the City Bank, Eastern Bank, BRAC Bank, United Commercial Bank, Bank Asia, Mutual Trust Bank, Bangladesh Commerce Bank and ICB Islamic Bank. At the same time, a foreign bank 'Standard Chartered Bank' is also interested.
But, the public banks have not yet shown their interest in this regard. The Bangladesh Bank is working to convince the public bank managements over the proposal.
According to the BB and IDRA officials, the Bank-Insurance scheme was started in the European countries like France and Spain in 1980. The policy has got popularity in the countries due to its successful operation.
After experiencing successes in the countries, some banks of African and Latin American countries have also started the scheme. Following their success stories, some Asian countries like Malaysia, Korea, Indonesia and the Philippines have also started it. They have also got success.
In this situation, Bangladesh has taken the steps to introduce the Bank-Insurance scheme in all the public and private scheduled banks.
The BB is analysing and examining the prospects of introducing the new policy following the sections 7 (1) (Dha) and 7 (3) of the Bank Company Act that whether the new system will be viable or not. If it is found viable, the BB will take a decision and issue a circular to introduce the new method for all banks of the country.
Executive Director of Bangladesh Bank Serajul Islam told the Daily Observer that they are planning to introduce the new method of issuing Bank-Insurance to fulfill the demands of their client. If the decision is finalized once, all the banks will have to be ready to issue the policies.
But, the policies will only be issued after getting the BB circular in this regard, he added.
It would impact the insurance sector as most clients may regain their confidence in taking the policies. The banks will not charge the client extra or try to make additional profits, he claimed.