Potentiality of Micro-Takaful in Bangladesh: Experience of Prime Islami Life Insurance Limited

Transcription

1 Potentiality of Micro-Takaful in Bangladesh: Experience of Prime Islami Life Insurance Limited 11th International Microinsurance Conference 2015 Hyatt Regency Casablanca, Morocco KAZI MD. MORTUZA ALI, (A.C.I.I.) Chief Consultant to the Board Prime Islami life Insurance limited Dhaka, Bangladesh.

2 Overview of Bangladesh Area : 144 thousand sq. km. Estimated Population: 160 m persons per sq. k.m. Projected 2020:170 m. Mortality rate of infant is 32 per Life expectancy for male is 66.5 years and 69 years for female. The growth rate of national economy 6% in average. Currency : BDT 78.00=$1.00. Inflation: 7% Unemployment: 5% Agricultural Employment: 50% Birth rate 20% per Death rate 6 per Age Structure: 0 to 14: 29% 15 to 59: 64% 60+: 7% India

3 Microinsurance in Bangladesh Formal Sector Operated by - Conventional Insurance (Life / Non-life) - Takaful Operator (Life / Non-life) - Banks/Telecom Operators Non-formal Sector Operated by - Micro Finance Institutions (M.F.Is) - Non-governmental organizations (NGOs) Public Sector- - Palli Karma-Sahayak Foundation (PKSF)

4 Formal Sector of Microinsurance Micro insurance products developed by the insurers licensed by the regulatory authority under the Insurance laws. Microinsurance products that are commonly provided by the commercial insurers in Bangladesh are term and endowment type life products.

5 NON-FORMAL Sector of Microinsurance There are more than 2000 NGO s micro finance institutions (MFIs). MF-NGOs appeared in the microinsurance scene in the late 1990s and early 2000s Grameen Bank and BRAC (Bangladesh Rural Advancement Committee) have health microinsurance provision along with life. ASA, one of the largest MF-NGOs is providing micro life insurance only. BRAC maintains big micro finance programs which includes group formation, savings mobilization, credit support, skill training, technical support and insurance benefit to its organized members. ASA (Association of Social Advancement) has managed life insurance by itself without any linkage with conventional insurance companies.

6 Characteristics of MI. in Bangladesh Provide cover for the lower income group. Premium collection process is more frequent. Claim process and underwriting are usually easier. Micro-insurance is often sold by non trained agents. Non Formal Micro-insurance operators are unregulated. Micro-insurance offered by MFI and NGO s are very often linked with micro finance. Most commonly available micro-insurance product are term life and credit life insurance. Personal assets of lower income people are seldom covered by micro insurers in Bangladesh. High drop outs of policies are common features in micro insurance sector.

7 PILIL at a Glance

8 PILIL at a Glance

9 PILIL at a Glance

10 PILIL at a Glance

11 PILIL at a Glance Bonus for Policyholders ( ) Policy Term Reversionary Bonus Terminal Bonus Below 10 Yrs Yrs Yrs to above Yrs (Amount Taka in Crore)

12 Features of Micro Takaful products of PILIL Small Savings Assurance Plan Prime Islami Deposit Pension Scheme Two-payment deposit pension scheme MUKTO BIMA PIDPS KALYAN BIMA Type of Plan Endowment plan Endowment plan with alternative option of annuity Anticipated endowment with option to annuity Policy Term 10 & 15 years 10 & 15 years 8,10,12,14,16,18 & 20 years Age of assured at commencement of policy Maximum age at maturity Mode of payment Min. 18 years Max. 50 years Min. 18 years Max. 50 years 60 years 60 years Monthly/ Quarterly/ Half-yearly/ yearly Monthly/ Quarterly/ Half-yearly/ yearly Min. 18 years Max. 52 years 60 years Monthly/ Quarterly/ Half-yearly/ yearly Maximum Sum Assured Monthly installment Tk. 2,00,000/- ($ 2532) 4,00,000/-($ 5063) 5,00,000/-($ 6329) Min. Tk.50/- ($ 0.63) Min. Tk. 200/- ($ 2.53) Max. Tk. 1,000/- ($ 12.65) Min. Tk. 200/- ($ 2.53) Max. Tk. 2,000/- ($ 25.31)

13 New Group Term Family Takaful Karmajibi Kalyan Bima Features of the plan 1.Maximum age at entry 59 years 2.Maximum age at expiry 60 years 3.Minimum sum assured Taka 50,000/- (USD -633) Benefits of the plan 1. Basic sum assured on normal death. 2. Accidental Death Benefit Double of Sum assured % Basic sum assured payable on total and permanent disablement % of basic sum assured payable as partial disablement benefit payable. 5. Stipend payable to the nominee on normal death of the life assured = 5% of basic sum assured to be divided equally and payable monthly for 12 months. 6. No maturity benefit is paid on completion of policy/group contract. 7. While expiring abroad 20% of sum ensured.

14 YEAR WISE NUMBER OF SOLD POLICIES IN THREE MICRO INSURANCE STATUS OF PLAN CODE 101/104, 04 & 13 Start Mukto Start PIDPS Start KB-13 Number of Sold Policies in Three Micro Insurance Products ( )

15 SOLD POLICIES ( ) 63,00% 62,00% 61,00% 60,00% 59,00% 58,00% 57,00% 56,00% 62,58% % of Micro Life Policyholders 62,19% 61,35% 58,96% 58,58%

16 PREMIUM INCOME ( ) to total premium

17 Average Sum Assured of Ordinary Life & Micro Life ( )

18 Tripartite Group Microtakaful contract between PILIL, Robi & Milvik In February, 2014 PILIL made a tripartite group microtakaful contract with Robi Axiata limited, Bangladesh Milvik AB of Investment AB Kinnevik, Sweden, to provide micro takaful service to Robi subscribers. Robi is one of the largest telecommunications operators in Bangladesh with a customer base of around 40 million.

19 Tripartite group Microtakaful contract between PILIL, Robi & Milvik (Cont.) Main features : 1. Eligibility & Enrollment: - Eligible applicants are individual prepaid SIM and postpaid Sim subscribers of Robi. 2. Sum assured & age of insureds- Age- Min/Max 18/60 Sum assured Min/Max- 4000/ /- (Taka) 3. Contract period-5 (five) years 4. Notice of Claim: The insurer should be notified of the occurrence of death of the insured as soon a s possible, but not exceeding 120(One twenty) days from the date of receiving notification of death of insured. 5. Underwriting requirements:-declaration of good health of the insured through registration by mobile handset 6. Death claim settlement period:- Three (3) working days after receipt of all necessary documents.

20 Tripartite Group Microtakaful agreement between PILIL, BRAC & Milvik BRAC, the insured, is one of the largest NGO in the world having service network in 11(eleven) countries and around 40(forty) million beneficiaries in the field of micorcredit, education, community development, health etc. Milvik, a Sweden based multinational company is the intermediary Milvik acts as service Provider and assists in procuring premium, motivating borrowers and also acts as claim processor & technical service provider. In Novermber, 2014, PILIL made a tripartite agreement with BRAC Bangladesh & Milvik AB Bangladesh to provide group microtakaful benefit to microcredit borrowers & their guardians of BRAC. Through the group microtakaful agreement with BRAC, PILIL is expected to cover more than one million microcredit borrowers of BRAC within five years contract period. PILIL would like to reach to the people of every village of Bangladesh with the benefit of microtakaful through this agreement.

21 Tripartite group Microtakaful contract between PILIL, BRAC & Milvik (Cont.) The main features of this group microtakaful agreement areas follows:- (i) Contract period- 5 (five) years (ii)limit of sum assured- (a) Minimum taka (b) Maximum taka (iii) Underwriting requirement:- Health Questionnaire irrespective of age & sum assured of borrowers. (iv)age at entry- (a) Minimum- 18 years (b) Maximum-64 years. (v) Exit age completion of 64 years. (vi) Period of Insurance- 6 months 24 months (vii) Beneficiary of individual coverage- Any of spouse, son/ daughter, parents, brother/ sister. (viii) Death Claim Settlement: - PILIL have to be informed about the death of insured within 120 days of his /her death

22 Micro Life Underwriting Status ( ) Type Year-2010 Year-2014 (%) of GR (+/-) Number of Insured % Average Sum at Risk (Figure in Taka Thous) 53,000 91, % Female % 52% 57% 9.62% % of Below SSC 98% 97% -0.64% % of Non Medical 94% 95% 0.58%

23 % OF MICRO & GROUP MICRO LIFE COVERAGE * Figure in Number Thous TYPE YEAR-2014 (Number of Coverage) % of Total MICRO LIFE % GROUP MICRO LIFE % TOTAL : %

24 % OF MICRO & GROUP MICRO FIRST YEAR PREMIUM TYPE * Figure in Taka Crore YEAR-2014 (First Year Premium) % of Total MICRO LIFE % GROUP MICRO LIFE % TOTAL : %

25 Findings of the Study People of Bangladesh are keen to have Shariah based financial services specially micro takaful products. In formal sector PILIL offered one individual micro takaful product in 2001 and added two more similar products by In formal sector PILIL offered one individual micro takaful product in 2001 and added two more by Three individual MT products contribute approximate 38% of PILIL S total premium. In 2014 total individual MT products were sold to approximate 40,000 people against 25,000 ordinary life policies. Micro life's share is 61% approx in terms of number. In PILIL started selling group micro takaful to mobile users and micro credit borrowers and covered near two million people. Target of inclusivity of micro takaful to lower income group could be achieve more quickly through group micro takaful (term Insurance).

26 Concluding Remarks Micro takaful is rapidly gaining acceptance by the regulatory authorities and the governments. The realization that the low-income population should not be excluded from insurance or financial system is gaining ground. For micro takaful to achieve its target of inclusivity, a concerted effort needs to be made by all the stakeholders including the regulatory authority. This paper has been prepared to identify the areas where attentions are required by all the stakeholders. It is strongly felt that cooperation is needed between all the stakeholder viz the government, the regulatory authority, takaful operators and the Shariah scholars. Microinsurance vis-à-vis micro takaful needs specific regulations because of its unique features. Two neighbor countries of Bangladesh, Pakistan & India have already framed, guidelines and regulations for microinsurance/microtakaful. In Banladesh we need rules and regulations both for takaful and microinsurance/microtakaful.

27 Thank you all Corporate Office: Raj Bhaban (6 th Floor), 29 Dilkusha C/A, Dhaka-1000, Bangladesh. Tel : , , Fax : pililbd@gmail.com, mortuzaalimd@yahoo.com, Web :