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Second foreign life insurer may enter Bangladesh market
Jasim Uddin Haroon
The proposal of Singapore-based Draycott Partners (DP) for setting up a cent per cent foreign-owned life insurance company in Bangladesh is now at the final level of scrutiny by the country's insurance regulator.
The company submitted an application in this connection to the Ministry of Finance (MoF) in April last.
The government might give its final approval for the second foreign life insurance company to operate in Bangladesh after getting detailed opinions from the Insurance Development and Regulatory Authority (IDRA).
"We've discussed the proposal at our regular meeting. We'll give our opinion soon," said a senior official at the IDRA.
The proposed life insurer wants to compete with the US-owned Metlife Alico that has been continuing its operation in the country since 1952 with more than 1.3 million policy-holders.
The DP has planned to bring an internationally reputed life insurance company as its strategic partner, who will own the majority stake in it and supervise the overall management of the new company.
"We've already started a series of discussions with a number of international life insurers. We're now discussing with insurers of Canada, China, Europe, the UK and the US," according to the DP.
The DP has planned to invest an initial capital of US$ 10 million. Its international strategic partner will have 80-90 per cent shareholding in the proposed company, while the DP will have its share at 10-20 per cent.
The Singapore-based company said there is still significant untapped potential for further growth of life insurance sector in Bangladesh.
"The people of the country are currently under-served and under-insured by their life insurance providers, compared to the situation in other emerging markets," according to Draycott Partners.
The company said it will develop micro-insurance strategies for rural communities to promote savings and protect products.
It also said the international insurance partner will be well positioned to leverage its network to bring international best practices and development programmes to Bangladesh.
Bangladesh now has 19 life insurance companies including the existing lone foreign operator -- MetLife Alico. Besides, more than 500 applications have been submitted to the government, seeking fresh licences, after Finance Minister A M A Muhith announced to issue licences to new life insurance companies.
Sources hinted that the government might issue licences to nine or ten new life insurance companies.
After the announcement, the government prepared a guideline to set up new insurance companies in the country.
Under the guideline, an amount of Tk 300 million in paid-up capital will be required to establish new life insurance companies.
Competence, integrity and qualification of the sponsors for becoming first directors of the proposed companies will be evaluated, for the first time under the guideline.
The would-be directors must fulfil the criterion of a 'Fit and Proper Test', and they must have management or business or professional experience for, at least, 10 years.
[ First Page ] 2012-06-23