The insurance sector of Bangladesh suffers from a lack of trust and awareness from the public, as well as burdensome taxes imposed by the government, according to a major industry stakeholder.
Sheikh Kabir Hossain, president of Bangladesh Insurance Association (BIA), said at a pre-budget press conference in Dhaka that the industry is being taxed at several levels, which hinders its growth. He also slammed the government for not paying enough attention to insurance.
However, the blame was not placed solely on the government, as various industry stakeholders have also failed to build trust and create a positive public opinion about insurance among the public, he said.
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Daily Star reports that the BIA released a six-point demand, asking for the removal of these various taxes: 5% gain tax on deposit holder’s profit, 15% VAT on agent commissions, and 5% source tax and tax on excess expenses. It also called for reduction of corporate taxes and an increase in the tax-free dividend income limit.
Due to these taxes, argued Hossain, policyholders do not get good returns from their insurance investments. If no claims are made, consumers earn very little on their policy’s maturity. These make consumers reluctant to get insurance, instead choosing to place their money in banks.
Ahasanul Islam Titu, vice president of BIA, added that insurance penetration in Bangladesh is less than 1% of GDP, far behind neighbouring nation India. This means more room for the industry to grow if the government provides favourable conditions.
Titu also called for stricter enforcement of the law mandating all companies to provide insurance coverage for their employees. Many businesses do not comply with this rule, he said.
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