Bangladesh, a rapidly developing economy termed by many as the next Asian Tiger recently in process of graduating into a Developing Country from LDC. Registering a consistent GDP growth of 7% and massive improvements in infrastructure development; with over 350% growth in power generation, over 148 million mobile subscribers (90% penetration) & 83 million internet subscribers (51% penetration), Bangladesh is shifting towards creative economy. However, when it comes to the insurance sector, penetration stands at a mere 3% - 4% (including formal & informal sector), necessitating a massive need for overhauling. In such a situation, the progressive Insurance Companies have a pivotal role to play in developing this industry along with regulators. Guardian Life Insurance Limited (GLIL), since its inception has been trying to do just that.
The benefits of financial services for the poor people are now universally acknowledged, and the practice of microcredit is becoming common in developing countries. In comparison, micro insurance for the poor –which has the potential to significantly aid millions of poor people, has received limited attention?
Because their resources are so limited, poor people can experience great financial disruption when unexpected events befall them. If a breadwinner is injured or falls ill, there is not only the loss of income and labor, but the prospect that without cash in advance there will no treatments at all. If a breadwinner dies, not only must funeral expenses be paid, but continued cash for basic needs and education of the family is required. A poor person’s property may be limited to a few animals or crops and modest shelter, but the destruction of any of these may be a great blow to the family’s economy. Even small sums insured can ensure some protection and peace of mind (and dignity) for a poor person.
From the point of view of insures, however, small sums insured mean small premiums and low profit margins. Thus micro insurance has to be well-administrated, cost efficient, and delivered on a large scale if it is to benefit the poor, and those who provide the micro insurance.